exv10w11



 







Exhibit 10.11




STANDARD INDUSTRIAL/COMMERCIAL

MULTI-TENANT LEASE — GROSS

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION




1. Basic Provisions (“Basic Provisions”).




     1.1 Parties: This Lease (“Lease”), dated for reference purposes only May 28, 2004, is
made by and between Rio Vista Industrial Investments, LLC (“Lessor“) and True Religion
Apparel Inc., a Nevada Corporation, and Guru Denim Inc., a California Corporation, Jointly &
Severally (“Lessee”), (collectively the “Parties”, or individually a “Party”).



     1.2(a) Premises: That certain portion of the Project (as defined below), including all
improvements therein or to be provided by Lessor under the terms of this Lease, commonly known by
the street address of 1525 — 1535 Rio Vista Avenue, located in the City of Los Angeles,
County of Los Angeles, State of California, with zip code 90023 as outlined
on Exhibit A attached hereto (“Premises”) and generally described as (describe briefly the nature
of the Premises):an approximate 19,316 square foot industrial building which is part of a larger
industrial complex.


In addition to Lessee’s rights to use and occupy the Premises as hereinafter specified, Lessee
shall have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as
hereinafter specified, but shall not have any rights to the roof, exterior walls or utility
raceways of the building containing the Premises (“Building”) or to any other buildings in the
Project. The Premises, the Building, the Common Areas, the land upon which they are located, along
with all other buildings and improvements thereon, are herein collectively referred to as the
“Project.” (See also Paragraph 2.)




     1.2(b) Parking: ___unreserved vehicle parking spaces (“Unreserved Parking
Spaces”); and twenty (20) reserved vehicle parking spaces (“Reserved Parking Spaces”).
(See also Paragraph 2.6.)



     1.3 Term:  3  years and  1  months (“Original Term”) commencing July 1,
2004 (“Commencement Date”) and ending July 31, 2007 (“Expiration Date”). (See also
Paragraph 3.)



     1.4 Early Possession: See Paragraph #62 (“Early Possession Date”). (See also
Paragraphs 3.2 and 3.3.)



     1.5 Base Rent: $15,500.00 per month (“Base Rent”), payable on the first
(1st) day of each month commencing July 1, 2004. (See also Paragraph 4.)



     þ If this box is checked, there are provisions in this Lease for the Base Rent to be
adjusted.



     1.6 Lessee’s Share of Common Area Operating Expenses: sixty-seven percent
(67%) (“Lessee’s Share”).



1.7 Base Rent and Other Monies Paid Upon Execution:





	 	(a)	 	Base Rent: $15,550.00 for the period July 1, 2004
through July 31, 2004.
	 
	 	(b)	 	Common Area Operating Expenses: $TBD for the period
___.
	 
	 	(c)	 	Security Deposit: $46,500.00 (“Security Deposit”).
(See also Paragraph 5.) See Addendum #61(b)
	 
	 	(d)	 	Other: $-0-     for N/A
   
.
	 
	 	(e)	 	Total Due Upon Execution of this Lease: $62,000.00.





     1.8 Agreed Use: warehouse, distribution, design and manufacture of garments and all other
related legal uses . (See also Paragraph 6.)



     1.9 Insuring Party. Lessor is the “Insuring Party”. (See also Paragraph 8.)



     1.10 Real Estate Brokers: (See also Paragraph 15.)



          (a) Representation: The following real estate brokers (the “Brokers”) and brokerage
relationships exist in this transaction (check applicable boxes):



 ̈                      represents Lessor exclusively (“Lessor’s Broker”);



 ̈                      represents Lessee exclusively (“Lessee’s Broker”); or



þ  GVA DAUM — J. Sackler / D. Muir  represents both Lessor and Lessee
(“Dual Agency”).




	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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          (b) Payment to Brokers: Upon execution and delivery of this Lease by both Parties, Lessor
shall pay to the Brokers the brokerage fee agreed to in a separate written agreement (or if there
is no such agreement, the sum of ___or ___% of the total Base Rent for the
brokerage services rendered by the Brokers).




     1.11 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by
___(“Guarantor”). (See also Paragraph 37.)



     1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda consisting of Paragraphs 
50  through  78  and Exhibits  A  through  C , all of which constitute
a part of this Lease.



2. Premises.




     2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set
forth in this Lease. Unless otherwise provided herein, any statement of size set forth in this
Lease, or that may have been used in calculating Rent, is an approximation which the Parties agree
is reasonable and any payments based thereon are not subject to revision whether or not the actual
size is more or less.



     2.2 Condition. Lessor shall deliver that portion of the Premises contained within the
Building (“Unit”) to Lessee broom clean and free of debris on the Commencement Date or the Early
Possession Date, whichever first occurs (“Start Date”), and, so long as the required service
contracts described in Paragraph 7.1(b) below are obtained by Lessee and in effect within thirty
days following the Start Date, warrants that the existing electrical, plumbing, fire sprinkler,
lighting, heating, ventilating and air conditioning systems (“HVAC”), loading doors, if any, and
all other such elements in the Unit, other than those constructed by Lessee, shall be in good
operating condition on said date and, that the structural elements of the roof, bearing walls and
foundation of the Unit shall be free of material defects. If a non-compliance with such warranty
exists as of the Start Date, or if one of such systems or elements should malfunction or fail
within the appropriate warranty period, Lessor shall, as Lessor’s sole obligation with respect to
such matter, except as otherwise provided in this Lease, promptly after receipt of written notice
from Lessee setting forth with specificity the nature and extent of such non-compliance,
malfunction or failure, rectify same at Lessor’s expense. The warranty periods shall be as
follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as to the remaining systems and
other elements of the Unit. If Lessee does not give Lessor the required notice within the
appropriate warranty period, correction of any such non-compliance, malfunction or failure shall be
the obligation of Lessee at Lessee’s sole cost and expense (except for the repairs to the fire
sprinkler systems, roof, foundations, and/or bearing walls — see Paragraph 7).



     2.3 Compliance. Lessor warrants that the improvements on the Premises and the Common Areas
comply with the building codes that were in effect at the time that each such improvement, or
portion thereof, was constructed, and also with all applicable laws, covenants or restrictions of
record, regulations, and ordinances in effect on the Start Date (“Applicable Requirements”). Said
warranty does not apply to the use to which Lessee will put the Premises or to any Alterations or
Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee
is responsible for determining whether or not the zoning is appropriate for Lessee’s intended use,
and acknowledges that past uses of the Premises may no longer be allowed. If the Premises do not
comply with said warranty, Lessor shall, except as otherwise provided, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent of such
non-compliance, rectify the same at Lessor’s expense. If Lessee does not give Lessor written
notice of a non-compliance with this warranty within 6 months following the Start Date, correction
of that non-compliance shall be the obligation of Lessee at Lessee’s sole cost and expense. If the
Applicable Requirements are hereafter changed so as to require during the term of this Lease the
construction of an addition to or an alteration of the Unit, Premises and/or Building, the
remediation of any Hazardous Substance, or the reinforcement or other physical modification of the
Unit, Premises and/or Building (“Capital Expenditure”), Lessor and Lessee shall allocate the cost
of such work as follows:



     (a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result
of the specific and unique use of the Premises by Lessee as compared with uses by tenants in
general, Lessee shall be fully responsible for the cost thereof, provided, however, that if such
Capital Expenditure is required during the last 2 years of this Lease and the cost thereof exceeds
6 months’ Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in
writing, within 10 days after receipt of Lessee’s termination notice that Lessor has elected to pay
the difference between the actual cost thereof and the amount equal to 6 months’ Base Rent. If
Lessee elects termination, Lessee shall immediately cease the use of the Premises which requires
such Capital





	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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Expenditure and deliver to Lessor written notice specifying a termination date at least 90
days thereafter. Such termination date shall, however, in no event be earlier than the last day
that Lessee could legally utilize the Premises without commencing such Capital Expenditure.




     (b) If such Capital Expenditure is not the result of the specific and unique use of the
Premises by Lessee (such as, governmentally mandated seismic modifications), then Lessor and Lessee
shall allocate the obligation to pay for the portion of such costs reasonably attributable to the
Premises pursuant to the formula set out in Paragraph 7.1(d); provided, however, that if such
Capital Expenditure is required during the last 2 years of this Lease or if Lessor reasonably
determines that it is not economically feasible to pay its share thereof, Lessor shall have the
option to terminate this Lease upon 90 days prior written notice to Lessee unless Lessee notifies
Lessor, in writing, within 10 days after receipt of Lessor’s termination notice that Lessee will
pay for such Capital Expenditure. If Lessor does not elect to terminate, and fails to tender its
share of any such Capital Expenditure, Lessee may advance such funds and deduct same, with
Interest, from Rent until Lessor’s share of such costs have been fully paid. If Lessee is unable
to finance Lessor’s share, or if the balance of the Rent due and payable for the remainder of this
Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right
to terminate this Lease upon 30 days written notice to Lessor.



     (c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to
apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital
Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use,
change in intensity of use, or modification to the Premises then, and in that event, Lessee shall
be fully responsible for the cost thereof, and Lessee shall not have any right to terminate this
Lease.



     2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised by Lessor and/or
Brokers to satisfy itself with respect to the condition of the Premises (including but not limited
to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance
with Applicable Requirements and the Americans with Disabilities Act), and their suitability for
Lessee’s intended use, (b) Lessee has made such investigation as it deems necessary with reference
to such matters and assumes all responsibility therefor as the same relate to its occupancy of the
Premises, and (c) neither Lessor, Lessor’s agents, nor Brokers have made any oral or written
representations or warranties with respect to said matters other than as set forth in this Lease.
In addition, Lessor acknowledges that: (i) Brokers have made no representations, promises or
warranties concerning Lessee’s ability to honor the Lease or suitability to occupy the Premises,
and (ii) it is Lessor’s sole responsibility to investigate the financial capability and/or
suitability of all proposed tenants.



     2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in Paragraph 2 shall be of
no force or effect if immediately prior to the Start Date Lessee was the owner or occupant of the
Premises. In such event, Lessee shall be responsible for any necessary corrective work.



     2.6 Vehicle Parking. Lessee shall be entitled to use the number of Unreserved Parking Spaces
and Reserved Parking Spaces specified in Paragraph 1.2(b) on those portions of the Common Areas
designated from time to time by Lessor for parking. Lessee shall not use more parking spaces than
said number. Said parking spaces shall be used for parking by vehicles no larger than full-size
passenger automobiles or pick-up trucks, herein called “Permitted Size Vehicles.” Lessor may
regulate the loading and unloading of vehicles by adopting Rules and Regulations as provided in
Paragraph 2.9. No vehicles other than Permitted Size Vehicles may be parked in the Common Area
without the prior written permission of Lessor.



     (a) Lessee shall not permit or allow any vehicles that belong to or are controlled by Lessee
or Lessee’s employees, suppliers, shippers, customers, contractors or invitees to be loaded,
unloaded, or parked in areas other than those designated by Lessor for such activities.



     (b) Lessee shall not service or store any vehicles in the Common Areas.



     (c) If Lessee permits or allows any of the prohibited activities described in this Paragraph
2.6, then Lessor shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove or tow away the vehicle involved and charge the cost to
Lessee, which cost shall be immediately payable upon demand by Lessor.





	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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     2.7 Common Areas — Definition. The term “Common Areas” is defined as all areas and facilities
outside the Premises and within the exterior boundary line of the Project and interior utility
raceways and installations within the Unit that are provided and designated by the Lessor from time
to time for the general non-exclusive use of Lessor, Lessee and other tenants of the Project and
their respective employees, suppliers, shippers, customers, contractors and invitees, including
parking areas, loading and unloading areas, trash areas, roadways, walkways, driveways and
landscaped areas.



     2.8 Common Areas — Lessee’s Rights. Lessor grants to Lessee, for the benefit of Lessee and
its employees, suppliers, shippers, contractors, customers and invitees, during the term of this
Lease, the non-exclusive right to use, in common with others entitled to such use, the Common Areas
as they exist from time to time, subject to any rights, powers, and privileges reserved by Lessor
under the terms hereof or under the terms of any rules and regulations or restrictions governing
the use of the Project. Under no circumstances shall the right herein granted to use the Common
Areas be deemed to include the right to store any property, temporarily or permanently, in the
Common Areas. Any such storage shall be permitted only by the prior written consent of Lessor or
Lessor’s designated agent, which consent may be revoked at any time. In the event that any
unauthorized storage shall occur, then Lessor shall have the right, without notice, in addition to
such other rights and remedies that it may have, to remove the property and charge the cost to
Lessee, which cost shall be immediately payable upon demand by Lessor.



     2.9 Common Areas — Rules and Regulations. Lessor or such other person(s) as Lessor may
appoint shall have the exclusive control and management of the Common Areas and shall have the
right, from time to time, to establish, modify, amend and enforce reasonable rules and regulations
(“Rules and Regulations”) for the management, safety, care, and cleanliness of the grounds, the
parking and unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of the Building and the Project and their invitees.
Lessee agrees to abide by and conform to all such Rules and Regulations, and to cause its
employees, suppliers, shippers, customers, contractors and invitees to so abide and conform.
Lessor shall not be responsible to Lessee for the non-compliance with said Rules and Regulations by
other tenants of the Project.



     2.10 Common Areas — Changes. Lessor shall have the right, in Lessor’s sole discretion, from
time to time:



     (a) To make changes to the Common Areas, including, without limitation, changes in the
location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading
and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility
raceways;



     (b) To close temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available;



     (c) To designate other land outside the boundaries of the Project to be a part of the Common
Areas;



     (d) To add additional buildings and improvements to the Common Areas;




     (e) To use the Common Areas while engaged in making additional improvements, repairs or
alterations to the Project, or any portion thereof; and



     (f) To do and perform such other acts and make such other changes in, to or with respect to
the Common Areas and Project as Lessor may, in the exercise of sound business judgment, deem to be
appropriate.



3. Term.




     3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease are as
specified in Paragraph 1.3.



     3.2 Early Possession. If Lessee totally or partially occupies the Premises prior to the
Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early
possession. All other terms of this Lease (including but not limited to the obligations to pay
Lessee’s Share of Common Area Operating Expenses, Real Property Taxes and insurance premiums and to
maintain the Premises) shall, however, be in effect during such period. Any such early possession
shall not affect the Expiration Date.





	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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     3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to
deliver possession of the Premises to Lessee by the Commencement Date. If, despite said efforts,
Lessor is unable to deliver possession as agreed, Lessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease. Lessee shall not, however, be
obligated to pay Rent or perform its other obligations until it receives possession of the
Premises. If possession is not delivered within 60 days after the Commencement Date, Lessee may,
at its option, by notice in writing within 10 days after the end of such 60 day period, cancel this
Lease, in which event the Parties shall be discharged from all obligations hereunder. If such
written notice is not received by Lessor within said 10 day period, Lessee’s right to cancel shall
terminate. Except as otherwise provided, if possession is not tendered to Lessee by the Start Date
and Lessee does not terminate this Lease, as aforesaid, any period of rent abatement that Lessee
would otherwise have enjoyed shall run from the date of delivery of possession and continue for a
period equal to what Lessee would otherwise have enjoyed under the terms hereof, but minus any days
of delay caused by the acts or omissions of Lessee. If possession of the Premises is not delivered
within 4 months after the Commencement Date, this Lease shall terminate unless other agreements are
reached between Lessor and Lessee, in writing.



     3.4 Lessee Compliance. Lessor shall not be required to tender possession of the Premises to
Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8.5).
Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under
this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessor’s
election to withhold possession pending receipt of such evidence of insurance. Further, if Lessee
is required to perform any other conditions prior to or concurrent with the Start Date, the Start
Date shall occur but Lessor may elect to withhold possession until such conditions are satisfied.



4. Rent.




     4.1. Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease
(except for the Security Deposit) are deemed to be rent (“Rent”).



     4.2 Common Area Operating Expenses. Lessee shall pay to Lessor during the term hereof, in
addition to the Base Rent, Lessee’s Share (as specified in Paragraph 1.6) of all Common Area
Operating Expenses, as hereinafter defined, during each calendar year of the term of this Lease, in
accordance with the following provisions:



     (a) “Common Area Operating Expenses” are defined, for purposes of this Lease, as all costs
incurred by Lessor relating to the ownership and operation of the Project, including, but not
limited to, the following:



     (i) The operation, repair and maintenance, in neat, clean, good order and condition, but not
the replacement (see subparagraph (e)), of the following:



     (aa) The Common Areas and Common Area improvements, including parking areas, loading and
unloading areas, trash areas, roadways, parkways, walkways, driveways, landscaped areas, bumpers,
irrigation systems, Common Area lighting facilities, fences and gates, elevators, roofs, and roof
drainage systems.



     (bb) Exterior signs and any tenant directories.



     (cc) Any fire sprinkler systems.



     (ii) The cost of water, gas, electricity and telephone to service the Common Areas and any
utilities not separately metered.



     (iii) Trash disposal, pest control services, property management, security services, and the
costs of any environmental inspections.



     (iv) Reserves set aside for maintenance and repair of Common Areas.



     (v) Any increase above the Base Real Property Taxes (as defined in Paragraph 10).





	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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     (vi) Any “Insurance Cost Increase” (as defined in Paragraph 8).



     (vii) Any deductible portion of an insured loss concerning the Building or the Common Areas.



     (viii) The cost of any Capital Expenditure to the Building or the Project not covered under
the provisions of Paragraph 2.3 provided; however, that Lessor shall allocate the cost of any such
Capital Expenditure over a 12 year period and Lessee shall not be required to pay more than
Lessee’s Share of 1/144th of the cost of such Capital Expenditure in any given month.



     (ix) Any other services to be provided by Lessor that are stated elsewhere in this Lease to be
a Common Area Operating Expense.



     (b) Any Common Area Operating Expenses and Real Property Taxes that are specifically
attributable to the Unit, the Building or to any other building in the Project or to the operation,
repair and maintenance thereof, shall be allocated entirely to such Unit, Building, or other
building. However, any Common Area Operating Expenses and Real Property Taxes that are not
specifically attributable to the Building or to any other building or to the operation, repair and
maintenance thereof, shall be equitably allocated by Lessor to all buildings in the Project.



     (c) The inclusion of the improvements, facilities and services set forth in Subparagraph
4.2(a) shall not be deemed to impose an obligation upon Lessor to either have said improvements or
facilities or to provide those services unless the Project already has the same, Lessor already
provides the services, or Lessor has agreed elsewhere in this Lease to provide the same or some of
them.



     (d) Lessee’s Share of Common Area Operating Expenses shall be payable by Lessee within 10 days
after a reasonably detailed statement of actual expenses is presented to Lessee. At Lessor’s
option, however, an amount may be estimated by Lessor from time to time of Lessee’s Share of annual
Common Area Operating Expenses and the same shall be payable monthly or quarterly, as Lessor shall
designate, during each 12 month period of the Lease term, on the same day as the Base Rent is due
hereunder. Lessor shall deliver to Lessee within 60 days after the expiration of each calendar
year a reasonably detailed statement showing Lessee’s Share of the actual Common Area Operating
Expenses incurred during the preceding year. If Lessee’s payments under this Paragraph 4.2(d)
during the preceding year exceed Lessee’s Share as indicated on such statement, Lessor shall credit
the amount of such over-payment against Lessee’s Share of Common Area Operating Expenses next
becoming due. If Lessee’s payments under this Paragraph 4.2(d) during the preceding year were less
than Lessee’s Share as indicated on such statement, Lessee shall pay to Lessor the amount of the
deficiency within 10 days after delivery by Lessor to Lessee of the statement.



     (e) When a capital component such as the roof, foundations, exterior walls or Common Area
capital improvement, such as the parking lot paving, elevators, fences, etc. requires replacement,
rather than repair or maintenance, Lessor shall, at Lessor’s expense, be responsible for such
replacement. Such expenses and/or costs are not Common Area Operating Expenses.



     4.3 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of
the United States, without offset or deduction (except as specifically permitted in this Lease), on
or before the day on which it is due. Rent for any period during the term hereof which is for less
than one full calendar month shall be prorated based upon the actual number of days of said month.
Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or
place as Lessor may from time to time designate in writing. Acceptance of a payment which is less
than the amount then due shall not be a waiver of Lessor’s rights to the balance of such Rent,
regardless of Lessor’s endorsement of any check so stating. In the event that any check, draft, or
other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees
to pay to Lessor the sum of $25.



     5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit
as security for Lessee’s faithful performance of its obligations under this Lease. If Lessee fails
to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any
portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall
within 10 days after written request therefor deposit monies with Lessor sufficient to restore






	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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said Security Deposit to the full amount required by this Lease. If the Base Rent increases during
the term of this Lease, Lessee shall, upon written request from Lessor, deposit additional monies
with Lessor so that the total amount of the Security Deposit shall at all times bear the same
proportion to the increased Base Rent as the initial Security Deposit bore to the initial Base
Rent. Should the Agreed Use be amended to accommodate a material change in the business of Lessee
or to accommodate a sublessee or assignee, Lessor shall have the right to increase the Security
Deposit to the extent necessary, in Lessor’s reasonable judgment, to account for any increased wear
and tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs
during this Lease and following such change the financial condition of Lessee is, in Lessor’s
reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor
as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based
on such change in financial condition. Lessor shall not be required to keep the Security Deposit
separate from its general accounts. Within 14 days after the expiration or termination of this
Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and otherwise within 30
days after the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return
that portion of the Security Deposit not used or applied by Lessor. No part of the Security
Deposit shall be considered to be held in trust, to bear interest or to be prepayment for any
monies to be paid by Lessee under this Lease.




6. Use.




     6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal
use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or
permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance,
or that disturbs occupants of or causes damage to neighboring premises or properties. Lessor shall
not unreasonably withhold or delay its consent to any written request for a modification of the
Agreed Use, so long as the same will not impair the structural integrity of the improvements on the
Premises or the mechanical or electrical systems therein, and/or is not significantly more
burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall within 7 days after
such request give written notification of same, which notice shall include an explanation of
Lessor’s objections to the change in the Agreed Use.



     6.2 Hazardous Substances.



     (a) Reportable Uses Require Consent. The term “Hazardous Substance” as used in this Lease
shall mean any product, substance, or waste whose presence, use, manufacture, disposal,
transportation, or release, either by itself or in combination with other materials expected to be
on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a
basis for potential liability of Lessor to any governmental agency or third party under any
applicable statute or common law theory. Hazardous Substances shall include, but not be limited
to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products or fractions
thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a
Reportable Use of Hazardous Substances without the express prior written consent of Lessor and
timely compliance (at Lessee’s expense) with all Applicable Requirements. “Reportable Use” shall
mean (i) the installation or use of any above or below ground storage tank, (ii) the generation,
possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a
permit from, or with respect to which a report, notice, registration or business plan is required
to be filed with, any governmental authority, and/or (iii) the presence at the Premises of a
Hazardous Substance with respect to which any Applicable Requirements requires that a notice be
given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the
foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in
the normal course of the Agreed Use, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to
any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In
addition, Lessor may condition its consent to any Reportable Use upon receiving such additional
assurances as Lessor reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability, including, but not limited
to, the installation (and removal on or before Lease expiration or termination) of protective
modifications (such as concrete encasements) and/or increasing the Security Deposit.



     (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a
Hazardous Substance has come to be located in, on, under or about the Premises, other than as
previously consented to by Lessor, Lessee shall immediately give written notice of such fact to
Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance.





	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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     (c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be
spilled or released in, on, under, or about the Premises (including through the plumbing or
sanitary sewer system) and shall promptly, at Lessee’s expense, take all investigatory and/or
remedial action reasonably recommended, whether or not formally ordered or required, for the
cleanup of any contamination of, and for the maintenance, security and/or monitoring of the
Premises or neighboring properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought onto the Premises during the term of
this Lease, by or for Lessee, or any third party.



     (d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its agents,
employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents
and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys’ and
consultants’ fees arising out of or involving any Hazardous Substance brought onto the Premises by
or for Lessee, or any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance under the Premises from
areas outside of the Project). Lessee’s obligations shall include, but not be limited to, the
effects of any contamination or injury to person, property or the environment created or suffered
by Lessee, and the cost of investigation, removal, remediation, restoration and/or abatement, and
shall survive the expiration or termination of this Lease. No termination, cancellation or release
agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this
Lease with respect to Hazardous Substances, unless specifically so agreed by Lessor in writing at
the time of such agreement.



     (e) Lessor Indemnification. Lessor and its successors and assigns shall indemnify, defend,
reimburse and hold Lessee, its employees and lenders, harmless from and against any and all
environmental damages, including the cost of remediation, which existed as a result of Hazardous
Substances on the Premises prior to the Start Date or which are caused by the gross negligence or
willful misconduct of Lessor, its agents or employees. Lessor’s obligations, as and when required
by the Applicable Requirements, shall include, but not be limited to, the cost of investigation,
removal, remediation, restoration and/or abatement, and shall survive the expiration or termination
of this Lease.



     (f) Investigations and Remediations. Lessor shall retain the responsibility and pay for any
investigations or remediation measures required by governmental entities having jurisdiction with
respect to the existence of Hazardous Substances on the Premises prior to the Start Date, unless
such remediation measure is required as a result of Lessee’s use (including “Alterations”, as
defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for
such payment. Lessee shall cooperate fully in any such activities at the request of Lessor,
including allowing Lessor and Lessor’s agents to have reasonable access to the Premises at
reasonable times in order to carry out Lessor’s investigative and remedial responsibilities.



     (g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e))
occurs during the term of this Lease, unless Lessee is legally responsible therefor (in which case
Lessee shall make the investigation and remediation thereof required by the Applicable Requirements
and this Lease shall continue in full force and effect, but subject to Lessor’s rights under
Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at
Lessor’s expense, in which event this Lease shall continue in full force and effect; or (ii) if the
estimated cost to remediate such condition exceeds 12 times the then monthly Base Rent or $100,000,
whichever is greater, give written notice to Lessee, within 30 days after receipt by Lessor of
knowledge of the occurrence of such Hazardous Substance Condition, of Lessor’s desire to terminate
this Lease as of the date 60 days following the date of such notice. In the event Lessor elects to
give a termination notice, Lessee may, within 10 days thereafter, give written notice to Lessor of
Lessee’s commitment to pay the amount by which the cost of the remediation of such Hazardous
Substance Condition exceeds an amount equal to 12 times the then monthly Base Rent or $100,000,
whichever is greater. Lessee shall provide Lessor with said funds or satisfactory assurance
thereof within 30 days following such commitment. In such event, this Lease shall continue in full
force and effect, and Lessor shall proceed to make such remediation as soon as reasonably possible
after the required funds are available. If Lessee does not give such notice and provide the
required funds or assurance thereof within the time provided, this Lease shall terminate as of the
date specified in Lessor’s notice of termination.



     6.3 Lessee’s Compliance with Applicable Requirements. Except as otherwise provided in this
Lease, Lessee shall, at Lessee’s sole expense, fully, diligently and in a timely manner, materially
comply with all Applicable Requirements, the requirements of any applicable fire insurance
underwriter or rating bureau, and the





	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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recommendations of Lessor’s engineers and/or consultants which relate in any manner to the
Premises, without regard to whether said requirements are now in effect or become effective after
the Start Date. Lessee shall, within 10 days after receipt of Lessor’s written request, provide
Lessor with copies of all permits and other documents, and other information evidencing Lessee’s
compliance with any Applicable Requirements specified by Lessor, and shall immediately upon
receipt, notify Lessor in writing (with copies of any documents involved) of any threatened or
actual claim, notice, citation, warning, complaint or report pertaining to or involving the failure
of Lessee or the Premises to comply with any Applicable Requirements.




     6.4 Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined in Paragraph 30) and
consultants shall have the right to enter into Premises at any time, in the case of an emergency,
and otherwise at reasonable times, for the purpose of inspecting the condition of the Premises and
for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid
by Lessor, unless a violation of Applicable Requirements, or a contamination is found to exist or
be imminent, or the inspection is requested or ordered by a governmental authority. In such case,
Lessee shall upon request reimburse Lessor for the cost of such inspection, so long as such
inspection is reasonably related to the violation or contamination.



7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.




     7.1 Lessee’s Obligations.



     (a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3
(Lessee’s Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or
Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense, keep the Premises,
Utility Installations (intended for Lessee’s exclusive use, no matter where located), and
Alterations in good order, condition and repair (whether or not the portion of the Premises
requiring repairs, or the means of repairing the same, are reasonably or readily accessible to
Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s use, any prior
use, the elements or the age of such portion of the Premises), including, but not limited to, all
equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities,
boilers, pressure vessels, fixtures, interior walls, interior surfaces of exterior walls, ceilings,
floors, windows, doors, plate glass, and skylights but excluding any items which are the
responsibility of Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good order,
condition and repair, shall exercise and perform good maintenance practices, specifically including
the procurement and maintenance of the service contracts required by Paragraph 7.1(b) below.
Lessee’s obligations shall include restorations, replacements or renewals when necessary to keep
the Premises and all improvements thereon or a part thereof in good order, condition and state of
repair.



     (b) Service Contracts. Lessee shall, at Lessee’s sole expense, procure and maintain
contracts, with copies to Lessor, in customary form and substance for, and with contractors
specializing and experienced in the maintenance of the following equipment and improvements, if
any, if and when installed on the Premises: (i) HVAC equipment, (ii) boiler and pressure vessels,
(iii) clarifiers, and (iv) any other equipment, if reasonably required by Lessor. However, Lessor
reserves the right, upon notice to Lessee, to procure and maintain any or all of such service
contracts, and if Lessor so elects, Lessee shall reimburse Lessor, upon demand, for the cost
thereof.



     (c) Failure to Perform. If Lessee fails to perform Lessee’s obligations under this Paragraph
7.1, Lessor may enter upon the Premises after 10 days’ prior written notice to Lessee (except in
the case of an emergency, in which case no notice shall be required), perform such obligations on
Lessee’s behalf, and put the Premises in good order, condition and repair, and Lessee shall
promptly reimburse Lessor for the cost thereof.



     (d) Replacement. Subject to Lessee’s indemnification of Lessor as set forth in Paragraph 8.7
below, and without relieving Lessee of liability resulting from Lessee’s failure to exercise and
perform good maintenance practices, if an item described in Paragraph 7.1(b) cannot be repaired
other than at a cost which is in excess of 50% of the cost of replacing such item, then such item
shall be replaced by Lessor, and the cost thereof shall be prorated between the Parties and Lessee
shall only be obligated to pay, each month during the remainder of the term of this Lease, on the
date on which Base Rent is due, an amount equal to the product of multiplying the cost of such
replacement by a fraction, the numerator of which is one, and the denominator of which is 144 (ie.
1/144th of the cost per month). Lessee shall pay interest on the unamortized balance at a rate
that is commercially reasonable in the judgment of Lessor’s accountants. Lessee may, however,
prepay its obligation at any time.





	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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     7.2 Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee’s Obligations), 9 (Damage
or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2,
shall keep in good order, condition and repair the foundations, exterior walls, structural
condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm
and/or smoke detection systems, fire hydrants, parking lots, walkways, parkways, driveways,
landscaping, fences, signs and utility systems serving the Common Areas and all parts thereof, as
well as providing the services for which there is a Common Area Operating Expense pursuant to
Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior surfaces of
exterior walls nor shall Lessor be obligated to maintain, repair or replace windows, doors or plate
glass of the Premises. Lessee expressly waives the benefit of any statute now or hereafter in
effect to the extent it is inconsistent with the terms of this Lease.



     7.3 Utility Installations; Trade Fixtures; Alterations.




     (a) Definitions. The term “Utility Installations” refers to all floor and window coverings,
air lines, power panels, electrical distribution, security and fire protection systems,
communication systems, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the
Premises. The term “Trade Fixtures” shall mean Lessee’s machinery and equipment that can be
removed without doing material damage to the Premises. The term “Alterations” shall mean any
modification of the improvements, other than Utility Installations or Trade Fixtures, whether by
addition or deletion. “Lessee Owned Alterations and/or Utility Installations” are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant
to Paragraph 7.4(a).



     (b) Consent. Lessee shall not make any Alterations or Utility Installations to the Premises
without Lessor’s prior written consent. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof) without such consent but upon
notice to Lessor, as long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, and the cumulative cost thereof during this
Lease as extended does not exceed a sum equal to 3 month’s Base Rent in the aggregate or a sum
equal to one month’s Base Rent in any one year. Notwithstanding the foregoing, Lessee shall not
make or permit any roof penetrations and/or install anything on the roof without the prior written
approval of Lessor. Lessor may, as a precondition to granting such approval, require Lessee to
utilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility Installations
that Lessee shall desire to make and which require the consent of the Lessor shall be presented to
Lessor in written form with detailed plans. Consent shall be deemed conditioned upon Lessee’s:
(i) acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the
permits and the plans and specifications prior to commencement of the work, and (iii) compliance
with all conditions of said permits and other Applicable Requirements in a prompt and expeditious
manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with
good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with as-built
plans and specifications. For work which costs an amount in excess of one month’s Base Rent,
Lessor may condition its consent upon Lessee providing a lien and completion bond in an amount
equal to 150% of the estimated cost of such Alteration or Utility Installation and/or upon Lessee’s
posting an additional Security Deposit with Lessor.



     (c) Indemnification. Lessee shall pay, when due, all claims for labor or materials furnished
or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are
or may be secured by any mechanic’s or materialmen’s lien against the Premises or any interest
therein. Lessee shall give Lessor not less than 10 days notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post notices of
non-responsibility. If Lessee shall contest the validity of any such lien, claim or demand, then
Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the
same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount
equal to 150% of the amount of such contested lien, claim or demand, indemnifying Lessor against
liability for the same. If Lessor elects to participate in any such action, Lessee shall pay
Lessor’s attorneys’ fees and costs.



     7.4 Ownership; Removal; Surrender; and Restoration.




     (a) Ownership. Subject to Lessor’s right to require removal or elect ownership as hereinafter
provided, all Alterations and Utility Installations made by Lessee shall be the property of Lessee,
but considered a part of the Premises. Lessor may, at any time, elect in writing to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility Installations. Unless
otherwise instructed per paragraph 7.4(b) hereof, all





	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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Lessee Owned Alterations and Utility Installations shall, at the expiration or termination of
this Lease, become the property of Lessor and be surrendered by Lessee with the Premises.




     (b) Removal. By delivery to Lessee of written notice from Lessor not earlier than 90 and not
later than 30 days prior to the end of the term of this Lease, Lessor may require that any or all
Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of
this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned
Alterations or Utility Installations made without the required consent.



     (c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any
earlier termination date, with all of the improvements, parts and surfaces thereof broom clean and
free of debris, and in good operating order, condition and state of repair, ordinary wear and tear
excepted. “Ordinary wear and tear” shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Notwithstanding the foregoing, if this Lease is for
12 months or less, then Lessee shall surrender the Premises in the same condition as delivered to
Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any
damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee owned
Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any
storage tank installed by or for Lessee. Lessee shall also completely remove from the Premises any
and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except
Hazardous Substances which were deposited via underground migration from areas outside of the
Project) even if such removal would require Lessee to perform or pay for work that exceeds
statutory requirements. Trade Fixtures shall remain the property of Lessee and shall be removed by
Lessee. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c)
without the express written consent of Lessor shall constitute a holdover under the provisions of
Paragraph 26 below.



8. Insurance; Indemnity.




     8.1 Payment of Premium Increases.



     (a) As used herein, the term “Insurance Cost Increase” is defined as any increase in the
actual cost of the insurance applicable to the Building and/or the Project and required to be
carried by Lessor, pursuant to Paragraphs 8.2(b), 8.3(a) and 8.3(b), ( “Required Insurance”), over
and above the Base Premium, as hereinafter defined, calculated on an annual basis. Insurance Cost
Increase shall include, but not be limited to, requirements of the holder of a mortgage or deed of
trust covering the Premises, Building and/or Project, increased valuation of the Premises, Building
and/or Project, and/or a general premium rate increase. The term Insurance Cost Increase shall
not, however, include any premium increases resulting from the nature of the occupancy of any other
tenant of the Building. If the parties insert a dollar amount in Paragraph 1.9, such amount shall
be considered the “Base Premium.” The Base Premium shall be the annual premium applicable to the 12
month period immediately preceding the Start Date. If, however, the Project was not insured for
the entirety of such 12 month period, then the Base Premium shall be the lowest annual premium
reasonably obtainable for the Required Insurance as of the Start Date, assuming the most nominal
use possible of the Building. In no event, however, shall Lessee be responsible for any portion of
the premium cost attributable to liability insurance coverage in excess of $2,000,000 procured
under Paragraph 8.2(b).



     (b) Lessee shall pay any Insurance Cost Increase to Lessor pursuant to Paragraph 4.2.
Premiums for policy periods commencing prior to, or extending beyond, the term of this Lease shall
be prorated to coincide with the corresponding Start Date or Expiration Date.



     8.2 Liability Insurance.




     (a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability
policy of insurance protecting Lessee and Lessor as an additional insured against claims for bodily
injury, personal injury and property damage based upon or arising out of the ownership, use,
occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall
be on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per
occurrence with an annual aggregate of not less than $2,000,000, an “Additional Insured-Managers or
Lessors of Premises Endorsement” and contain the “Amendment of the Pollution Exclusion Endorsement”
for damage caused by heat, smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall include coverage
for liability assumed under this Lease as an “insured contract” for the performance of Lessee’s
indemnity obligations





	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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under this Lease. The limits of said insurance shall not, however, limit the liability of
Lessee nor relieve Lessee of any obligation hereunder. All insurance carried by Lessee shall be
primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall
be considered excess insurance only.




     (b) Carried by Lessor. Lessor shall maintain liability insurance as described in Paragraph
8.2(a), in addition to, and not in lieu of, the insurance required to be maintained by Lessee.
Lessee shall not be named as an additional insured therein.



     8.3 Property Insurance — Building, Improvements and Rental Value.




     (a) Building and Improvements. Lessor shall obtain and keep in force a policy or policies of
insurance in the name of Lessor, with loss payable to Lessor, any ground-lessor, and to any Lender
insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time, or the amount required
by any Lender, but in no event more than the commercially reasonable and available insurable value
thereof. Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee’s personal
property shall be insured by Lessee under Paragraph 8.4. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all risks of direct physical
loss or damage (except the perils of flood and/or earthquake unless required by a Lender),
including coverage for debris removal and the enforcement of any Applicable Requirements requiring
the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the
result of a covered loss. Said policy or policies shall also contain an agreed valuation provision
in lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection causing an
increase in the annual property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to
where the Premises are located. If such insurance coverage has a deductible clause, the deductible
amount shall not exceed $1,000 per occurrence.



     (b) Rental Value. Lessor shall also obtain and keep in force a policy or policies in the name
of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent for one
year with an extended period of indemnity for an additional 180 days (“Rental Value Insurance”).
Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and
the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable
by Lessee, for the next 12 month period.



     (c) Adjacent Premises. Lessee shall pay for any increase in the premiums for the property
insurance of the Building and for the Common Areas or other buildings in the Project if said
increase is caused by Lessee’s acts, omissions, use or occupancy of the Premises.



     (d) Lessee’s Improvements. Since Lessor is the Insuring Party, Lessor shall not be required
to insure Lessee Owned Alterations and Utility Installations unless the item in question has become
the property of Lessor under the terms of this Lease.



     8.4 Lessee’s Property; Business Interruption Insurance.




     (a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee’s
personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such
insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee
shall provide Lessor with written evidence that such insurance is in force.



     (b) Business Interruption. Lessee shall obtain and maintain loss of income and extra expense
insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable
to all perils commonly insured against by prudent lessees in the business of Lessee or attributable
to prevention of access to the Premises as a result of such perils.



     (c) No Representation of Adequate Coverage. Lessor makes no representation that the limits or
forms of coverage of insurance specified herein are adequate to cover Lessee’s property, business
operations or obligations under this Lease.





	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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     8.5 Insurance Policies. Insurance required herein shall be by companies duly licensed or
admitted to transact business in the state where the Premises are located, and maintaining during
the policy term a “General Policyholders Rating” of at least B+, V, as set forth in the most
current issue of “Best’s Insurance Guide”, or such other rating as may be required by a Lender.
Lessee shall not do or permit to be done anything which invalidates the required insurance
policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of
such insurance or certificates evidencing the existence and amounts of the required insurance. No
such policy shall be cancelable or subject to modification except after 30 days prior written
notice to Lessor. Lessee shall, at least 30 days prior to the expiration of such policies, furnish
Lessor with evidence of renewals or “insurance binders” evidencing renewal thereof, or Lessor may
order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee
to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of
the remaining term of this Lease, whichever is less. If either Party shall fail to procure and
maintain the insurance required to be carried by it, the other Party may, but shall not be required
to, procure and maintain the same.



     8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor
each hereby release and relieve the other, and waive their entire right to recover damages against
the other, for loss of or damage to its property arising out of or incident to the perils required
to be insured against herein. The effect of such releases and waivers is not limited by the amount
of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to
have their respective property damage insurance carriers waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.



     8.7 Indemnity. Except for Lessor’s gross negligence or willful misconduct, Lessee shall
indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor’s master
or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or
damages, liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilities
arising out of, involving, or in connection with, the use and/or occupancy of the Premises by
Lessee. If any action or proceeding is brought against Lessor by reason of any of the foregoing
matters, Lessee shall upon notice defend the same at Lessee’s expense by counsel reasonably
satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be defended or indemnified.



     8.8 Exemption of Lessor from Liability. Lessor shall not be liable for injury or damage to
the person or goods, wares, merchandise or other property of Lessee, Lessee’s employees,
contractors, invitees, customers, or any other person in or about the Premises, whether such damage
or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances,
plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage
results from conditions arising upon the Premises or upon other portions of the Building, or from
other sources or places. Lessor shall not be liable for any damages arising from any act or
neglect of any other tenant of Lessor nor from the failure of Lessor to enforce the provisions of
any other lease in the Project. Notwithstanding Lessor’s negligence or breach of this Lease,
Lessor shall under no circumstances be liable for injury to Lessee’s business or for any loss of
income or profit therefrom.



9. Damage or Destruction.




     9.1 Definitions.




     (a) “Premises Partial Damage” shall mean damage or destruction to the improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations, which can reasonably be
repaired in 3 months or less from the date of the damage or destruction, and the cost thereof does
not exceed a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee in writing within 30
days from the date of the damage or destruction as to whether or not the damage is Partial or
Total.



     (b) “Premises Total Destruction” shall mean damage or destruction to the improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which
cannot reasonably be repaired in 3 months or less from the date of the damage or destruction and/or
the cost thereof exceeds a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee in writing
within 30 days from the date of the damage or destruction as to whether or not the damage is
Partial or Total.



	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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     (c) “Insured Loss” shall mean damage or destruction to improvements on the Premises, other
than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an
event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.



     (d) “Replacement Cost” shall mean the cost to repair or rebuild the improvements owned by
Lessor at the time of the occurrence to their condition existing immediately prior thereto,
including demolition, debris removal and upgrading required by the operation of Applicable
Requirements, and without deduction for depreciation.



     (e) “Hazardous Substance Condition” shall mean the occurrence or discovery of a condition
involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph
6.2(a), in, on, or under the Premises.



     9.2 Partial Damage — Insured Loss. If a Premises Partial Damage that is an Insured Loss
occurs, then Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures
or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this
Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor’s
election, make the repair of any damage or destruction the total cost to repair of which is $5,000
or less, and, in such event, Lessor shall make any applicable insurance proceeds available to
Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required
insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds as and when required to complete
said repairs. In the event, however, such shortage was due to the fact that, by reason of the
unique nature of the improvements, full replacement cost insurance coverage was not commercially
reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within 10 days following receipt of written
notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance
thereof within said 10 day period, the party responsible for making the repairs shall complete them
as soon as reasonably possible and this Lease shall remain in full force and effect. If such funds
or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10
days thereafter to: (i) make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full force and effect, or
(ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled to reimbursement
of any funds contributed by Lessee to repair any such damage or destruction. Premises Partial
Damage due to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding that there may
be some insurance coverage, but the net proceeds of any such insurance shall be made available for
the repairs if made by either Party.



     9.3 Partial Damage — Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss
occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the
repairs at Lessee’s expense), Lessor may either: (i) repair such damage as soon as reasonably
possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or
(ii) terminate this Lease by giving written notice to Lessee within 30 days after receipt by Lessor
of knowledge of the occurrence of such damage. Such termination shall be effective 60 days
following the date of such notice. In the event Lessor elects to terminate this Lease, Lessee
shall have the right within 10 days after receipt of the termination notice to give written notice
to Lessor of Lessee’s commitment to pay for the repair of such damage without reimbursement from
Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30
days after making such commitment. In such event this Lease shall continue in full force and
effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the
required funds are available. If Lessee does not make the required commitment, this Lease shall
terminate as of the date specified in the termination notice.



     9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total
Destruction occurs, this Lease shall terminate 60 days following such Destruction. If the damage
or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall
have the right to recover Lessor’s damages from Lessee, except as provided in Paragraph 8.6.



     9.5 Damage Near End of Term. If at any time during the last 6 months of this Lease there is
damage for which the cost to repair exceeds one month’s Base Rent, whether or not an Insured Loss,
Lessor may terminate this Lease effective 60 days following the date of occurrence of such damage
by giving a written termination notice



	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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to Lessee within 30 days after the date of occurrence of such damage. Notwithstanding the
foregoing, if Lessee at that time has an exercisable option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising such option and (b) providing
Lessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to make the
repairs on or before the earlier of (i) the date which is 10 days after Lessee’s receipt of
Lessor’s written notice purporting to terminate this Lease, or (ii) the day prior to the date upon
which such option expires. If Lessee duly exercises such option during such period and provides
Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds,
Lessor shall, at Lessor’s commercially reasonable expense, repair such damage as soon as reasonably
possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such
option and provide such funds or assurance during such period, then this Lease shall terminate on
the date specified in the termination notice and Lessee’s option shall be extinguished.




     9.6 Abatement of Rent; Lessee’s Remedies.




     (a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a
Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent
payable by Lessee for the period required for the repair, remediation or restoration of such damage
shall be abated in proportion to the degree to which Lessee’s use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value insurance. All other obligations of
Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such
damage, destruction, remediation, repair or restoration except as provided herein.



     (b) Remedies. If Lessor shall be obligated to repair or restore the Premises and does not
commence, in a substantial and meaningful way, such repair or restoration within 90 days after such
obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of
Lessee’s election to terminate this Lease on a date not less than 60 days following the giving of
such notice. If Lessee gives such notice and such repair or restoration is not commenced within 30
days thereafter, this Lease shall terminate as of the date specified in said notice. If the repair
or restoration is commenced within such 30 days, this Lease shall continue in full force and
effect. “Commence” shall mean either the unconditional authorization of the preparation of the
required plans, or the beginning of the actual work on the Premises, whichever first occurs.



     9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph
6.2(g) or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any
other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so
much of Lessee’s Security Deposit as has not been, or is not then required to be, used by Lessor.



     9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease shall govern the
effect of any damage to or destruction of the Premises with respect to the termination of this
Lease and hereby waive the provisions of any present or future statute to the extent inconsistent
herewith.



10. Real Property Taxes.




     10.1 Definitions.



     (a) “Real Property Taxes.” As used herein, the term “Real Property Taxes” shall include any
form of assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax
(other than inheritance, personal income or estate taxes); improvement bond; and/or license fee
imposed upon or levied against any legal or equitable interest of Lessor in the Project, Lessor’s
right to other income therefrom, and/or Lessor’s business of leasing, by any authority having the
direct or indirect power to tax and where the funds are generated with reference to the Project
address and where the proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Project is located. The term “Real Property
Taxes” shall also include any tax, fee, levy, assessment or charge, or any increase therein,
imposed by reason of events occurring during the term of this Lease, including but not limited to,
a change in the ownership of the Project or any portion thereof or a change in the improvements
thereon.



     (b) “Base Real Property Taxes.” As used herein, the term “Base Real Property Taxes” shall be
the amount of Real Property Taxes, which are assessed against the Premises, Building, Project or
Common Areas in the calendar year during which the Lease is executed. In calculating Real Property
Taxes for any calendar year, the Real Property Taxes for any real estate tax year shall be included
in the calculation of Real Property Taxes for such calendar year based upon the number of days
which such calendar year and tax year have in common.



	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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     10.2 Payment of Taxes. Lessor shall pay the Real Property Taxes applicable to the Project,
and except as otherwise provided in Paragraph 10.3, any increases in such amounts over the Base
Real Property Taxes shall be included in the calculation of Common Area Operating Expenses in
accordance with the provisions of Paragraph 4.2.



     10.3 Additional Improvements. Common Area Operating Expenses shall not include Real Property
Taxes specified in the tax assessor’s records and work sheets as being caused by additional
improvements placed upon the Project by other lessees or by Lessor for the exclusive enjoyment of
such other lessees. Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at
the time Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any
increase in Real Property Taxes if assessed solely by reason of Alterations, Trade Fixtures or
Utility Installations placed upon the Premises by Lessee or at Lessee’s request.



     10.4 Joint Assessment. If the Building is not separately assessed, Real Property Taxes
allocated to the Building shall be an equitable proportion of the Real Property Taxes for all of
the land and improvements included within the tax parcel assessed, such proportion to be determined
by Lessor from the respective valuations assigned in the assessor’s work sheets or such other
information as may be reasonably available. Lessor’s reasonable determination thereof, in good
faith, shall be conclusive.



     10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed
against and levied upon Lessee Owned Alterations and Utility Installations, Trade Fixtures,
furnishings, equipment and all personal property of Lessee contained in the Premises. When
possible, Lessee shall cause its Lessee Owned Alterations and Utility Installations, Trade
Fixtures, furnishings, equipment and all other personal property to be assessed and billed
separately from the real property of Lessor. If any of Lessee’s said property shall be assessed
with Lessor’s real property, Lessee shall pay Lessor the taxes attributable to Lessee’s property
within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee’s
property.



     11. Utilities. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal
and other utilities and services supplied to the Premises, together with any taxes thereon.
Notwithstanding the provisions of Paragraph 4.2, if at any time in Lessor’s sole judgment, Lessor
determines that Lessee is using a disproportionate amount of water, electricity or other commonly
metered utilities, or that Lessee is generating such a large volume of trash as to require an
increase in the size of the dumpster and/or an increase in the number of times per month that the
dumpster is emptied, then Lessor may increase Lessee’s Base Rent by an amount equal to such
increased costs.



12. Assignment and Subletting.




     12.1 Lessor’s Consent Required.



     (a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber
(collectively, “assign or assignment”) or sublet all or any part of Lessee’s interest in this Lease
or in the Premises without Lessor’s prior written consent.



     (b) A change in the control of Lessee shall constitute an assignment requiring consent. The
transfer, on a cumulative basis, of 25% or more of the voting control of Lessee shall constitute a
change in control for this purpose.



     (c) The involvement of Lessee or its assets in any transaction, or series of transactions (by
way of merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or
not a formal assignment or hypothecation of this Lease or Lessee’s assets occurs, which results or
will result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net
Worth as it was represented at the time of the execution of this Lease or at the time of the most
recent assignment to which Lessor has consented, or as it exists immediately prior to said
transaction or transactions constituting such reduction, whichever was or is greater, shall be
considered an assignment of this Lease to which Lessor may withhold its consent. “Net Worth of
Lessee” shall mean the net worth of Lessee (excluding any guarantors) established under generally
accepted accounting principles.



     (d) An assignment or subletting without consent shall, at Lessor’s option, be a Default
curable after notice per Paragraph 13.1(c), or a noncurable Breach without the necessity of any
notice and grace period. If Lessor elects to treat such unapproved assignment or subletting as a
noncurable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days written
notice, increase the monthly Base Rent to 110% of the Base Rent then in effect. Further, in the
event of such Breach and rental adjustment, (i) the purchase price of any option to purchase



	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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the Premises held by Lessee shall be subject to similar adjustment to 110% of the price
previously in effect, and (ii) all fixed and non-fixed rental adjustments scheduled during the
remainder of the Lease term shall be increased to 110% of the scheduled adjusted rent.




     (e) Lessee’s remedy for any breach of Paragraph 12.1 by Lessor shall be limited to
compensatory damages and/or injunctive relief.



     12.2 Terms and Conditions Applicable to Assignment and Subletting.




     (a) Regardless of Lessor’s consent, any assignment or subletting shall not: (i) be effective
without the express written assumption by such assignee or sublessee of the obligations of Lessee
under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other obligations to be
performed by Lessee.



     (b) Lessor may accept Rent or performance of Lessee’s obligations from any person other than
Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or
disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver
or estoppel of Lessor’s right to exercise its remedies for Lessee’s Default or Breach.



     (c) Lessor’s consent to any assignment or subletting shall not constitute a consent to any
subsequent assignment or subletting.



     (d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against
Lessee, any Guarantors or anyone else responsible for the performance of Lessee’s obligations under
this Lease, including any assignee or sublessee, without first exhausting Lessor’s remedies against
any other person or entity responsible therefore to Lessor, or any security held by Lessor.



     (e) Each request for consent to an assignment or subletting shall be in writing, accompanied
by information relevant to Lessor’s determination as to the financial and operational
responsibility and appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any, together with a fee of
$1,000 or 10% of the current monthly Base Rent applicable to the portion of the Premises which is
the subject of the proposed assignment or sublease, whichever is greater, as consideration for
Lessor’s considering and processing said request. Lessee agrees to provide Lessor with such other
or additional information and/or documentation as may be reasonably requested. (See also Paragraph
36)



     (f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such
assignment or entering into such sublease, be deemed to have assumed and agreed to conform and
comply with each and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has
specifically consented to in writing.



     12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and
conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be
deemed included in all subleases under this Lease whether or not expressly incorporated therein:



     (a) Lessee hereby assigns and transfers to Lessor all of Lessee’s interest in all Rent payable
on any sublease, and Lessor may collect such Rent and apply same toward Lessee’s obligations under
this Lease; provided, however, that until a Breach shall occur in the performance of Lessee’s
obligations, Lessee may collect said Rent. Lessor shall not, by reason of the foregoing or any
assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the
sublessee for any failure of Lessee to perform and comply with any of Lessee’s obligations to such
sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a
written notice from Lessor stating that a Breach exists in the performance of Lessee’s obligations
under this Lease, to pay to Lessor all Rent due and to become due under the sublease. Sublessee
shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any
obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from
Lessee to the contrary.



     (b) In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn
to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the



	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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exercise of said option to the expiration of such sublease; provided, however, Lessor shall
not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or
for any prior Defaults or Breaches of such sublessor.




     (c) Any matter requiring the consent of the sublessor under a sublease shall also require the
consent of Lessor.



     (d) No sublessee shall further assign or sublet all or any part of the Premises without
Lessor’s prior written consent.



     (e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee,
who shall have the right to cure the Default of Lessee within the grace period, if any, specified
in such notice. The sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.



13. Default; Breach; Remedies.




     13.1 Default; Breach. A “Default” is defined as a failure by the Lessee to comply with or
perform any of the terms, covenants, conditions or Rules and Regulations under this Lease. A
“Breach” is defined as the occurrence of one or more of the following Defaults, and the failure of
Lessee to cure such Default within any applicable grace period:



     (a) The abandonment of the Premises; or the vacating of the Premises without providing a
commercially reasonable level of security, or where the coverage of the property insurance
described in Paragraph 8.3 is jeopardized as a result thereof, or without providing reasonable
assurances to minimize potential vandalism.



     (b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be
made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable
evidence of insurance or surety bond, or to fulfill any obligation under this Lease which endangers
or threatens life or property, where such failure continues for a period of 3 business days
following written notice to Lessee.



     (c) The failure by Lessee to provide (i) reasonable written evidence of compliance with
Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized
assignment or subletting, (iv) an Estoppel Certificate, (v) a requested subordination, (vi)
evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 41
(easements), or (viii) any other documentation or information which Lessor may reasonably require
of Lessee under the terms of this Lease, where any such failure continues for a period of 10 days
following written notice to Lessee.



     (d) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or
of the rules adopted under Paragraph 2.9 hereof, other than those described in subparagraphs
13.1(a), (b) or (c), above, where such Default continues for a period of 30 days after written
notice; provided, however, that if the nature of Lessee’s Default is such that more than 30 days
are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee
commences such cure within said 30 day period and thereafter diligently prosecutes such cure to
completion.



     (e) The occurrence of any of the following events: (i) the making of any general arrangement
or assignment for the benefit of creditors; (ii) becoming a “debtor” as defined in 11 U.S.C. § 101
or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same
is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease,
where possession is not restored to Lessee within 30 days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee’s assets located at the Premises or of
Lessee’s interest in this Lease, where such seizure is not discharged within 30 days; provided,
however, in the event that any provision of this subparagraph (e) is contrary to any applicable
law, such provision shall be of no force or effect, and not affect the validity of the remaining
provisions.



     (f) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor
was materially false.



	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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     (g) If the performance of Lessee’s obligations under this Lease is guaranteed: (i) the death
of a Guarantor, (ii) the termination of a Guarantor’s liability with respect to this Lease other
than in accordance with the terms of such guaranty, (iii) a Guarantor’s becoming insolvent or the
subject of a bankruptcy filing, (iv) a Guarantor’s refusal to honor the guaranty, or (v) a
Guarantor’s breach of its guaranty obligation on an anticipatory basis, and Lessee’s failure,
within 60 days following written notice of any such event, to provide written alternative assurance
or security, which, when coupled with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the Guarantors that existed at the time of execution of
this Lease.



     13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations,
within 10 days after written notice (or in case of an emergency, without notice), Lessor may, at
its option, perform such duty or obligation on Lessee’s behalf, including but not limited to the
obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or
approvals. Lessee shall pay to Lessor an amount equal to 115% of the costs and expenses incurred
by Lessor in such performance upon receipt of an invoice therefor. If any check given to Lessor by
Lessee shall not be honored by the bank upon which it is drawn, Lessor, as its option, may require
all future payments to be made by Lessee to be by cashier’s check. In the event of a Breach,
Lessor may, with or without further notice or demand, and without limiting Lessor in the exercise
of any right or remedy which Lessor may have by reason of such Breach:



     (a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case
this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned
at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid
rent which would have been earned after termination until the time of award exceeds the amount of
such rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the
time of award of the amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided;
and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused
by the Lessee’s failure to perform its obligations under this Lease or which in the ordinary course
of things would be likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary renovation and alteration of
the Premises, reasonable attorneys’ fees, and that portion of any leasing commission paid by Lessor
in connection with this Lease applicable to the unexpired term of this Lease. The worth at the
time of award of the amount referred to in provision (iii) of the immediately preceding sentence
shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of
the District within which the Premises are located at the time of award plus one percent. Efforts
by Lessor to mitigate damages caused by Lessee’s Breach of this Lease shall not waive Lessor’s
right to recover damages under Paragraph 12. If termination of this Lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding
any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover
all or any part thereof in a separate suit. If a notice and grace period required under Paragraph
13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lessee
under the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1.
In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer
statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of
the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease
entitling Lessor to the remedies provided for in this Lease and/or by said statute.



     (b) Continue the Lease and Lessee’s right to possession and recover the Rent as it becomes
due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of
maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor’s
interests, shall not constitute a termination of the Lessee’s right to possession.



     (c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of
the state wherein the Premises are located. The expiration or termination of this Lease and/or the
termination of Lessee’s right to possession shall not relieve Lessee from liability under any
indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by
reason of Lessee’s occupancy of the Premises.



     13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement or consideration
for Lessee’s entering into this Lease, all of which concessions are hereinafter referred to as
“Inducement Provisions”, shall be deemed conditioned upon Lessee’s full and faithful performance of
all of the terms, covenants and conditions of this Lease.



	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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     Upon Breach of this Lease by Lessee, any such Inducement Provision shall automatically be
deemed deleted from this Lease and of no further force or effect, and any rent, other charge,
bonus, inducement or consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor, notwithstanding any
subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or the cure of the
Breach which initiated the operation of this paragraph shall not be deemed a waiver by Lessor of
the provisions of this paragraph unless specifically so stated in writing by Lessor at the time of
such acceptance.



     13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will cause
Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within 5 days after such amount shall be due, then, without any
requirement for notice to Lessee, Lessee shall immediately pay to Lessor a one-time late charge
equal to 10% of each such overdue amount or $100, whichever is greater. The parties hereby agree
that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by
reason of such late payment. Acceptance of such late charge by Lessor shall in no event constitute
a waiver of Lessee’s Default or Breach with respect to such overdue amount, nor prevent the
exercise of any of the other rights and remedies granted hereunder. In the event that a late
charge is payable hereunder, whether or not collected, for 3 consecutive installments of Base Rent,
then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor’s
option, become due and payable quarterly in advance.



     13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not
received by Lessor, when due as to scheduled payments (such as Base Rent) or within 30 days
following the date on which it was due for non-scheduled payment, shall bear interest from the date
when due, as to scheduled payments, or the 31st day after it was due as to non-scheduled payments.
The interest (“Interest”) charged shall be equal to the prime rate reported in the Wall Street
Journal as published closest prior to the date when due plus 4%, but shall not exceed the maximum
rate allowed by law. Interest is payable in addition to the potential late charge provided for in
Paragraph 13.4.



     13.6 Breach by Lessor.



     (a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails
within a reasonable time to perform an obligation required to be performed by Lessor. For purposes
of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by
Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for such
purpose, of written notice specifying wherein such obligation of Lessor has not been performed;
provided, however, that if the nature of Lessor’s obligation is such that more than 30 days are
reasonably required for its performance, then Lessor shall not be in breach if performance is
commenced within such 30 day period and thereafter diligently pursued to completion.



     (b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender
cures said breach within 30 days after receipt of said notice, or if having commenced said cure
they do not diligently pursue it to completion, then Lessee may elect to cure said breach at
Lessee’s expense and offset from Rent an amount equal to the greater of one month’s Base Rent or
the Security Deposit, and to pay an excess of such expense under protest, reserving Lessee’s right
to reimbursement from Lessor. Lessee shall document the cost of said cure and supply said
documentation to Lessor.



     14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent
domain or sold under the threat of the exercise of said power (collectively “Condemnation”), this
Lease shall terminate as to the part taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than 10% of the floor area of the Unit, or more than
25% of Lessee’s Reserved Parking Spaces, is taken by Condemnation, Lessee may, at Lessee’s option,
to be exercised in writing within 10 days after Lessor shall have given Lessee written notice of
such taking (or in the absence of such notice, within 10 days after the condemning authority shall
have taken possession) terminate this Lease as of the date the condemning authority takes such
possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease
shall remain in full force and effect as to the portion of the Premises remaining, except that the
Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such
Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whether such
award shall be made as compensation for diminution in value of the leasehold, the value of the part
taken, or for severance damages; provided, however, that Lessee shall be entitled to



	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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any compensation for Lessee’s relocation expenses, loss of business goodwill and/or Trade Fixtures,
without regard to whether or not this Lease is terminated pursuant to the provisions of this
Paragraph. All Alterations and Utility Installations made to the Premises by Lessee, for purposes
of Condemnation only, shall be considered the property of the Lessee and Lessee shall be entitled
to any and all compensation which is payable therefor. In the event that this Lease is not
terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by
such Condemnation.




15. Brokerage Fees.




     15.1 Additional Commission. In addition to the payments owed pursuant to Paragraph 1.10
above, and unless Lessor and the Brokers otherwise agree in writing, Lessor agrees that: (a) if
Lessee exercises any Option, (b) if Lessee acquires from Lessor any rights to the Premises or other
premises owned by Lessor and located within the Project, (c) if Lessee remains in possession of the
Premises, with the consent of Lessor, after the expiration of this Lease, or (d) if Base Rent is
increased, whether by agreement or operation of an escalation clause herein, then, Lessor shall pay
Brokers a fee in accordance with the schedule of the Brokers in effect at the time of the execution
of this Lease.



     15.2 Assumption of Obligations. Any buyer or transferee of Lessor’s interest in this Lease
shall be deemed to have assumed Lessor’s obligation hereunder. Brokers shall be third party
beneficiaries of the provisions of Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to
Brokers any amounts due as and for brokerage fees pertaining to this Lease when due, then such
amounts shall accrue Interest. In addition, if Lessor fails to pay any amounts to Lessee’s Broker
when due, Lessee’s Broker may send written notice to Lessor and Lessee of such failure and if
Lessor fails to pay such amounts within 10 days after said notice, Lessee shall pay said monies to
its Broker and offset such amounts against Rent. In addition, Lessee’s Broker shall be deemed to
be a third party beneficiary of any commission agreement entered into by and/or between Lessor and
Lessor’s Broker for the limited purpose of collecting any brokerage fee owed.



     15.3 Representations and Indemnities of Broker Relationships. Lessee and Lessor each
represent and warrant to the other that it has had no dealings with any person, firm, broker or
finder (other than the Brokers, if any) in connection with this Lease, and that no one other than
said named Brokers is entitled to any commission or finder’s fee in connection herewith. Lessee
and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and
against liability for compensation or charges which may be claimed by any such unnamed broker,
finder or other similar party by reason of any dealings or actions of the indemnifying Party,
including any costs, expenses, attorneys’ fees reasonably incurred with respect thereto.



16. Estoppel Certificates.




     (a) Each Party (as “Responding Party”) shall within 10 days after written notice from the
other Party (the “Requesting Party”) execute, acknowledge and deliver to the Requesting Party a
statement in writing in form similar to the then most current “Estoppel Certificate” form published
by the American Industrial Real Estate Association, plus such additional information, confirmation
and/or statements as may be reasonably requested by the Requesting Party.



     (b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within
such 10 day period, the Requesting Party may execute an Estoppel Certificate stating that: (i) the
Lease is in full force and effect without modification except as may be represented by the
Requesting Party, (ii) there are no uncured defaults in the Requesting Party’s performance, and
(iii) if Lessor is the Requesting Party, not more than one month’s rent has been paid in advance.
Prospective purchasers and encumbrancers may rely upon the Requesting Party’s Estoppel Certificate,
and the Responding Party shall be estopped from denying the truth of the facts contained in said
Certificate.



     (c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee
and all Guarantors shall deliver to any potential lender or purchaser designated by Lessor such
financial statements as may be reasonably required by such lender or purchaser, including but not
limited to Lessee’s financial statements for the past 3 years. All such financial statements shall
be received by Lessor and such lender or purchaser in confidence and shall be used only for the
purposes herein set forth.



     17. Definition of Lessor. The term “Lessor” as used herein shall mean the owner or owners at the
time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee’s
interest in the prior lease. In the



	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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event of a transfer of Lessor’s title or interest in the Premises or this Lease, Lessor shall
deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by
Lessor. Except as provided in Paragraph 15, upon such transfer or assignment and delivery of the
Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to
the obligations and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the
Lessor shall be binding only upon the Lessor as hereinabove defined. Notwithstanding the above,
and subject to the provisions of Paragraph 20 below, the original Lessor under this Lease, and all
subsequent holders of the Lessor’s interest in this Lease shall remain liable and responsible with
regard to the potential duties and liabilities of Lessor pertaining to Hazardous Substances as
outlined in Paragraph 6.2 above.




     18. Severability. The invalidity of any provision of this Lease, as determined by a court of
competent jurisdiction, shall in no way affect the validity of any other provision hereof.



     19. Days. Unless otherwise specifically indicated to the contrary, the word “days” as used in this
Lease shall mean and refer to calendar days.



     20. Limitation on Liability. Subject to the provisions of Paragraph 17 above, the obligations of
Lessor under this Lease shall not constitute personal obligations of Lessor, the individual
partners of Lessor or its or their individual partners, directors, officers or shareholders, and
Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse against the individual
partners of Lessor, or its or their individual partners, directors, officers or shareholders, or
any of their personal assets for such satisfaction.



     21. Time of Essence. Time is of the essence with respect to the performance of all obligations to
be performed or observed by the Parties under this Lease.



     22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between
the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous
agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to
the Brokers that it has made, and is relying solely upon, its own investigation as to the nature,
quality, character and financial responsibility of the other Party to this Lease and as to the use,
nature, quality and character of the Premises. Brokers have no responsibility with respect thereto
or with respect to any default or breach hereof by either Party. The liability (including court
costs and attorneys’ fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or modification hereto
shall be limited to an amount up to the fee received by such Broker pursuant to this Lease;
provided, however, that the foregoing limitation on each Broker’s liability shall not be applicable
to any gross negligence or willful misconduct of such Broker.



23. Notices.




     23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law
shall be in writing and may be delivered in person (by hand or by courier) or may be sent by
regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid,
or by facsimile transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease
shall be that Party’s address for delivery or mailing of notices. Either Party may by written
notice to the other specify a different address for notice, except that upon Lessee’s taking
possession of the Premises, the Premises shall constitute Lessee’s address for notice. A copy of
all notices to Lessor shall be concurrently transmitted to such party or parties at such addresses
as Lessor may from time to time hereafter designate in writing.



     23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt card, or if no
delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed
given 48 hours after the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that guarantee next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or
courier. Notices transmitted by facsimile transmission or similar means shall be deemed delivered
upon telephone confirmation of receipt (confirmation report from fax machine is sufficient),
provided a copy is also delivered via delivery or mail. If notice is received on a Saturday,
Sunday or legal holiday, it shall be deemed received on the next business day.



     24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant or condition
hereof by



	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any
subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition
hereof. Lessor’s consent to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be
construed as the basis of an estoppel to enforce the provision or provisions of this Lease
requiring such consent. The acceptance of Rent by Lessor shall not be a waiver of any Default or
Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of monies or damages
due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection
therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless
specifically agreed to in writing by Lessor at or before the time of deposit of such payment.




25. Disclosures Regarding The Nature of a Real Estate Agency Relationship.




     (a) When entering into a discussion with a real estate agent regarding a real estate
transaction, a Lessor or Lessee should from the outset understand what type of agency relationship
or representation it has with the agent or agents in the transaction. Lessor and Lessee
acknowledge being advised by the Brokers in this transaction, as follows:



     (i) Lessor’s Agent. A Lessor’s agent under a listing agreement with the Lessor acts
as the agent for the Lessor only. A Lessor’s agent or subagent has the following affirmative
obligations: To the Lessor: A fiduciary duty of utmost care, integrity, honesty, and
loyalty in dealings with the Lessor. To the Lessee and the Lessor: a. Diligent exercise
of reasonable skills and care in performance of the agent’s duties. b. A duty of honest and fair
dealing and good faith. c. A duty to disclose all facts known to the agent materially affecting
the value or desirability of the property that are not known to, or within the diligent attention
and observation of, the Parties. An agent is not obligated to reveal to either Party any
confidential information obtained from the other Party which does not involve the affirmative
duties set forth above.



     (ii) Lessee’s Agent. An agent can agree to act as agent for the Lessee only. In
these situations, the agent is not the Lessor’s agent, even if by agreement the agent may receive
compensation for services rendered, either in full or in part from the Lessor. An agent acting
only for a Lessee has the following affirmative obligations. To the Lessee: A fiduciary
duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To the
Lessee and the Lessor: a. Diligent exercise of reasonable skills and care in performance of
the agent’s duties. b. A duty of honest and fair dealing and good faith. c. A duty to disclose
all facts known to the agent materially affecting the value or desirability of the property that
are not known to, or within the diligent attention and observation of, the Parties. An agent is
not obligated to reveal to either Party any confidential information obtained from the other Party
which does not involve the affirmative duties set forth above.



     (iii) Agent Representing Both Lessor and Lessee. A real estate agent, either acting
directly or through one or more associate licenses, can legally be the agent of both the Lessor and
the Lessee in a transaction, but only with the knowledge and consent of both the Lessor and the
Lessee. In a dual agency situation, the agent has the following affirmative obligations to both
the Lessor and the Lessee: a. A fiduciary duty of utmost care, integrity, honesty and loyalty in
the dealings with either Lessor or the Lessee. b. Other duties to the Lessor and the Lessee as
stated above in subparagraphs (i) or (ii). In representing both Lessor and Lessee, the agent may
not without the express permission of the respective Party, disclose to the other Party that the
Lessor will accept rent in an amount less than that indicated in the listing or that the Lessee is
willing to pay a higher rent than that offered. The above duties of the agent in a real estate
transaction do not relieve a Lessor or Lessee from the responsibility to protect their own
interests. Lessor and Lessee should carefully read all agreements to assure that they adequately
express their understanding of the transaction. A real estate agent is a person qualified to
advise about real estate. If legal or tax advice is desired, consult a competent professional.



     (b) Brokers have no responsibility with respect to any default or breach hereof by either
Party. The liability (including court costs and attorneys’ fees), of any Broker with respect to
any breach of duty, error or omission relating to this Lease shall not exceed the fee received by
such Broker pursuant to this Lease; provided, however, that the foregoing limitation on each
Broker’s liability shall not be applicable to any gross negligence or willful misconduct of such
Broker.



     (c) Buyer and Seller agree to identify to Brokers as “Confidential” any communication or
information given Brokers that is considered by such Party to be confidential.



	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part
thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over,
then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the
expiration or termination. Nothing contained herein shall be construed as consent by Lessor to any
holding over by Lessee.



27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall,
wherever possible, be cumulative with all other remedies at law or in equity.



28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be
observed or performed by Lessee are both covenants and conditions. In construing this Lease, all
headings and titles are for the convenience of the Parties only and shall not be considered a part
of this Lease. Whenever required by the context, the singular shall include the plural and vice
versa. This Lease shall not be construed as if prepared by one of the Parties, but rather
according to its fair meaning as a whole, as if both Parties had prepared it.



29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties, their personal
representatives, successors and assigns and be governed by the laws of the State in which the
Premises are located. Any litigation between the Parties hereto concerning this Lease shall be
initiated in the county in which the Premises are located.



30. Subordination; Attornment; Non-Disturbance.




     30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate
to any ground lease, mortgage, deed of trust, or other hypothecation or security device
(collectively, “Security Device”), now or hereafter placed upon the Premises, to any and all
advances made on the security thereof, and to all renewals, modifications, and extensions thereof.
Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as
“Lender”) shall have no liability or obligation to perform any of the obligations of Lessor under
this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to
the lien of its Security Device by giving written notice thereof to Lessee, whereupon this Lease
and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates
of the documentation or recordation thereof.



     30.2 Attornment. Subject to the non-disturbance provisions of Paragraph 30.3, Lessee agrees
to attorn to a Lender or any other party who acquires ownership of the Premises by reason of a
foreclosure of a Security Device, and that in the event of such foreclosure, such new owner for the
remainder of the term hereof, or, at the election of the new owner, this Lease will automatically
become a new lease between Lessee and such new owner, and (ii) Lessor shall thereafter be relieved
of any further obligations hereunder and such new owner shall assume all of Lessor’s obligations,
except that such new owner shall not: (a) be liable for any act or omission of any prior lessor or
with respect to events occurring prior to acquisition of ownership; (b) be subject to any offsets
or defenses which Lessee might have against any prior lessor, (c) be bound by prepayment of more
than one month’s rent, or (d) be liable for the return of any security deposit paid to any prior
lessor.



     30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor after the
execution of this Lease, Lessee’s subordination of this Lease shall be subject to receiving a
commercially reasonable non-disturbance agreement (a “Non-Disturbance Agreement”) from the Lender
which Non-Disturbance Agreement provides that Lessee’s possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long as Lessee is not in
Breach hereof and attorns to the record owner of the Premises. Further, within 60 days after the
execution of this Lease, Lessor shall use its commercially reasonable efforts to obtain a
Non-Disturbance Agreement from the holder of any pre-existing Security Device which is secured by
the Premises. In the event that Lessor is unable to provide the Non-Disturbance Agreement within
said 60 days, then Lessee may, at Lessee’s option, directly contact Lender and attempt to negotiate
for the execution and delivery of a Non-Disturbance Agreement.



     30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be effective without
the execution of any further documents; provided, however, that, upon written request from Lessor
or a Lender in connection with a sale, financing or refinancing of the Premises, Lessee and Lessor
shall execute such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.


31. Attorneys’ Fees. If any Party or Broker brings an action or proceeding involving the Premises
whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party
(as hereafter defined) in any




	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys’ fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or
proceeding is pursued to decision or judgment. The term, “Prevailing Party” shall include, without
limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case
may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or
Broker of its claim or defense. The attorneys’ fees award shall not be computed in accordance with
any court fee schedule, but shall be such as to fully reimburse all attorneys’ fees reasonably
incurred. In addition, Lessor shall be entitled to attorneys’ fees, costs and expenses incurred in
the preparation and service of notices of Default and consultations in connection therewith,
whether or not a legal action is subsequently commenced in connection with such Default or
resulting Breach ($200 is a reasonable minimum per occurrence for such services and consultation).



32. Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall have the right to
enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times for
the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such
alterations, repairs, improvements or additions to the Premises as Lessor may deem necessary. All
such activities shall be without abatement of rent or liability to Lessee. Lessor may at any time
place on the Premises any ordinary “For Sale” signs and Lessor may during the last 6 months of the
term hereof place on the Premises any ordinary “For Lease” signs. Lessee may at any time place on
the Premises any ordinary “For Sublease” sign.



33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises
without Lessor’s prior written consent. Lessor shall not be obligated to exercise any standard of
reasonableness in determining whether to permit an auction.



34. Signs. Except for ordinary “For Sublease” signs which may be placed only on the Premises,
Lessee shall not place any sign upon the Project without Lessor’s prior written consent. All signs
must comply with all Applicable Requirements.



35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary
or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a
termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or
lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor’s failure within 10 days following any such event to elect to the
contrary by written notice to the holder of any such lesser interest, shall constitute Lessor’s
election to have such event constitute the termination of such interest.



36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party
is required to an act by or for the other Party, such consent shall not be unreasonably withheld or
delayed. Lessor’s actual reasonable costs and expenses (including but not limited to architects’,
attorneys’, engineers’ and other consultants’ fees) incurred in the consideration of, or response
to, a request by Lessee for any Lessor consent, including but not limited to consents to an
assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee
upon receipt of an invoice and supporting documentation therefor. Lessor’s consent to any act,
assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee
of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or
Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such
consent. The failure to specify herein any particular condition to Lessor’s consent shall not
preclude the imposition by Lessor at the time of consent of such further or other conditions as are
then reasonable with reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other hereunder and reasonably
requests the reasons for such determination, the determining party shall furnish its reasons in
writing and in reasonable detail within 10 business days following such request.




37. Guarantor.




     37.1 Execution. The Guarantors, if any, shall each execute a guaranty in the form most
recently published by the American Industrial Real Estate Association, and each such Guarantor
shall have the same obligations as Lessee under this Lease.



     37.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails or refuses,
upon request to provide: (a) evidence of the execution of the guaranty, including the authority of
the party signing on Guarantor’s behalf to obligate Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors authorizing the making of
such guaranty, (b) current financial statements, (c) an Estoppel Certificate, or (d) written
confirmation that the guaranty is still in effect.



	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the
covenants, conditions and provisions on Lessee’s part to be observed and performed under this
Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term
hereof.



39. Options. If Lessee is granted an option, as defined below, then the following provisions shall
apply.




     39.1 Definition. “Option” shall mean: (a) the right to extend the term of or renew this
Lease or to extend or renew any lease that Lessee has on other property of Lessor; (b) the right of
first refusal or first offer to lease either the Premises or other property of Lessor; (c) the
right to purchase or the right of first refusal to purchase the Premises or other property of
Lessor.



     39.2 Options Personal To Original Lessee. Any Option granted to Lessee in this Lease is
personal to the original Lessee, and cannot be assigned or exercised by anyone other than said
original Lessee and only while the original Lessee is in full possession of the Premises and, if
requested by Lessor, with Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.



     39.3 Multiple Options. In the event that Lessee has any multiple Options to extend or renew
this Lease, a later Option cannot be exercised unless the prior Options have been validly
exercised.



     39.4 Effect of Default on Options.



     (a) Lessee shall have no right to exercise an Option: (i) during the period commencing with
the giving of any notice of Default and continuing until said Default is cured, (ii) during the
period of time any Rent is unpaid (without regard to whether notice thereof is given Lessee), (iii)
during the time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has been given
3 or more notices of separate Default, whether or not the Defaults are cured, during the 12 month
period immediately preceding the exercise of the Option.



     (b) The period of time within which an Option may be exercised shall not be extended or
enlarged by reason of Lessee’s inability to exercise an Option because of the provisions of
Paragraph 39.4(a).



     (c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee’s
due and timely exercise of the Option, if, after such exercise and prior to the commencement of the
extended term, (i) Lessee fails to pay Rent for a period of 30 days after such Rent becomes due
(without any necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee 3 or more
notices of separate Default during any 12 month period, whether or not the Defaults are cured, or
(iii)if Lessee commits a Breach of this Lease.


40. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does
not include the cost of guard service or other security measures, and that Lessor shall have no
obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of third parties.



41. Reservations. Lessor reserves the right: (i) to grant, without the consent or joinder of
Lessee, such easements, rights and dedications that Lessor deems necessary, (ii) to cause the
recordation of parcel maps and restrictions, and (iii) to create and/or install new utility
raceways, so long as such easements, rights, dedications, maps, restrictions, and utility raceways
do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate such rights.



42. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of
money to be paid by one Party to the other under the provisions hereof, the Party against whom the
obligation to pay the money is asserted shall have the right to make payment “under protest” and
such payment shall not be regarded as a voluntary payment and there shall survive the right on the
part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there
was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party
shall be entitled to recover such sum or so much thereof as it was not legally required to pay.



43. Authority. If either Party hereto is a corporation, trust, limited liability company,
partnership, or similar entity, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and deliver this Lease on its
behalf. Each Party shall, within 30 days after request, deliver to the other Party satisfactory
evidence of such authority.



44. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or
handwritten provisions shall be controlled by the typewritten or handwritten provisions.




	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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45. Offer. Preparation of this Lease by either party or their agent and submission of same to the
other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended
to be binding until executed and delivered by all Parties hereto.



46. Amendments. This Lease may be modified only in writing, signed by the Parties in interest at
the time of the modification. As long as they do not materially change Lessee’s obligations
hereunder, Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be
reasonably required by a Lender in connection with the obtaining of normal financing or refinancing
of the Premises.



47. Multiple Parties. If more than one person or entity is named herein as either Lessor or
Lessee, such multiple Parties shall have joint and several responsibility to comply with the terms
of this Lease.



48. Waiver of Jury Trial. The Parties hereby waive their respective rights to trial by jury in any
action or proceeding involving the Property or arising out of this Agreement.



49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation and/or the
Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease o is
þ is not attached to this Lease.



LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED
HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE
PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE
COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO
THE PREMISES.



ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE
ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS
LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:



1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.



2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID
INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES,
THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING
SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES
FOR LESSEE’S INTENDED USE.



WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE
LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES ARE
LOCATED.



The parties hereto have executed this Lease at the place and on the dates specified above their
respective signatures.




	 	 	 
	Executed at: L.A.

	 	Executed at: L.A.
	 
	 	 
	on: 6/4/04

	 	on: 6/3/04
	 
	 	 
	By LESSOR:

	 	By LESSEE:
	Rio Vista Industrial Investments, LLC

	 	True Religion Apparel Inc., a Nevada Corporation,
and Guru Denim Inc.,
	 

	 	a California Corporation, Jointly & Severally
	 
	 	 
	By:

	 	By:
	Name Printed: Jerrold S. Felsenthal

	 	Name Printed: Jeffrey Lubell / Kymberly Lubell
	Title: Manager

	 	Title: President / Secretary
	 

	 	(True Religion Apparel Inc.)
	By:

	 	By:
	Name Printed:

	 	Name Printed: Jeffrey Lubell / Kymberly Lubell
	Title:

	 	Title: President / Secretary
	 

	 	          (Guru Denim Inc.)






	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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	Address: 9201 Wilshire Blvd., Suite 301

	 	Address: 201 East Arena Street
	Beverly Hills, CA 90210

	 	El Segundo, CA 90245
	 
	 	 
	Telephone: (310) 273-9201

	 	Telephone: (310) 615-1978
	Facsimile: (310) 273-8951

	 	Facsimile: (310) 615-1975
	Federal ID No.

	 	Federal ID No. 98-0352633





These forms are often modified to meet changing requirements of law and needs of the industry.
Always write or call to make sure you are utilizing the most current form: American Industrial
Real Estate Association, 700 South Flower Street, Suite 600, Los Angeles, CA90017. (213) 687-8777.





(c)Copyright 1998 By American Industrial Real Estate Association.

All rights reserved.

No part of these works may be reproduced in any form without permission in writing.




	 	 	 	 	 
	                    

	 	 	 	                    
	                    

	 	 	 	                    
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ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL

MULTI-TENANT LEASE-GROSS

BY AND BETWEEN

RIO VISTA INDUSTRIAL INVESTMENTS, LLC (“LESSOR”)

AND

TRUE RELIGION APPAREL INC., A NEVADA CORPORATION, AND GURU DENIM INC.,

A CALIFORNIA CORPORATION, JOINTLY & SEVERALLY (“LESSEE”)

FOR THE PROPERTY LOCATED AT

1525-1535 RIO VISTA AVENUE, LOS ANGELES, CALIFORNIA 90023

DATED MAY 28, 2004





	50	 	PERMITS:
	 
	 	 	Lessee warrants and represents that Lessee has satisfied itself that it can obtain all
licenses, permits, franchises and other authorizations necessary to conduct the business it
intends to conduct in the Premises and is not relying on any representation or warranty made
by Lessor or Lessor’s agents with respect thereto. Lessor makes no representations or
warranties that Lessee will be able to obtain any licenses, permits, franchises or other
authorizations necessary or required to conduct the uses permitted herein on the Premises.
Lessee at its sole cost and expense shall obtain all licenses, permits, franchises and
authorizations. If it is subsequently determined that Lessee cannot obtain such permits and
licenses to operate, Lessee shall not have the right to terminate this Lease or to have an
abatement of rent.
	 
	51.	 	SIGNAGE:
	 
	 	 	Paragraph 34 of this Lease notwithstanding, Lessee shall have permission, at Lessee’s sole
cost and expense, to place one (1) sign on the Premises of approximately 2’ 4” x 10’
provided that such sign meets the sign criteria as may be set forth by Lessor. Prior to
installation of the sign, Lessee shall submit specifications and position to Lessor for
Lessor’s prior written approval. Lessee shall be responsible, at Lessee’s sole cost and
expense, for the removal of said sign and restoring the Premises to its original condition
upon vacating the Premises (Please see Exhibit “B”).
	 
	52.	 	NO BROKERS:
	 
	 	 	The parties hereby represent and warrant to one another that they know of no broker, agent,
finder or any other person who is entitled to any commission, fee or other compensation in
connection with this Lease other than GVA DAUM. The parties hereby indemnify, save, defend
and hold harmless one another from and against their respective breach of this
representation and warranty.
	 
	53.	 	ASSIGNMENT OF LEASE AND DEFAULT:
	 
	 	 	(a) In General. Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage, encumber or hypothecate or otherwise convey all or any part of Lessee’s
interest in this Lease or in the Premises, nor sublet the Premises or any portion thereof,
nor license the use of all or any portion of the Premises, without in each instance Lessor’s
prior written consent, which Lessor shall not unreasonably withhold. Any attempted
assignment, transfer, mortgage, encumbrance, hypothecation, conveyance, licensing or
subletting without such consent shall be void, and shall constitute a breach of this Lease.
The acceptance of rent by Lessor from any other person shall not be deemed a consent to any
subsequent assignment, transfer, mortgage, encumbrance, hypothecation, conveyance, licensing
or subletting nor is it a consent to any use of the Premises or the improvements therein
other than the use described in
	 
	 	 	Paragraph 6.1 of this Lease. In the event that Lessee is a corporation, a change or changes
in the ownership, whether voluntary or involuntary, by operation of law or otherwise, which
aggregates fifty percent (50%) or more of the total capital stock of Lessee or fifty percent
(50%) or more of the voting capital stock of Lessee, shall be deemed an assignment of this
Lease. Lessee agrees to reimburse Lessor for Lessor’s reasonable attorneys’ fees and costs
(not to exceed $1,000) incurred in conjunction with the review, negotiation, processing and
documentation of any requested assignment, transfer, mortgage, encumbrance, hypothecation,
conveyance, licensing or subletting. Lessor shall not be required to consent to any
assignment, transfer, mortgage, encumbrance, hypothecation, conveyance, licensing or
subletting unless and until any lender holding lien on the Premises, if any, has given its
prior written consent thereto as provided in the loan documents in connection with such
loan, if any.
	 
	 	 	(b) Procedures for Obtaining Lessor’s Consent. Notwithstanding anything to the
contrary contained in this Paragraph 53, in the event that Lessee or any sublessee,
transferee, licensee or assignee of Lessee (all hereinafter referred to as “Lessee” for
purposes of this Paragraph 53), shall intend to assign this Lease or sublet or license all
or any portion of the Premises or otherwise transfer the Lease or any interest





	 	 	 	 	 
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29









 






ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL

MULTI-TENANT LEASE-GROSS

BY AND BETWEEN

RIO VISTA INDUSTRIAL INVESTMENTS, LLC (“LESSOR”)

AND

TRUE RELIGION APPAREL INC., A NEVADA CORPORATION, AND GURU DENIM INC.,

A CALIFORNIA CORPORATION, JOINTLY & SEVERALLY (“LESSEE”)

FOR THE PROPERTY LOCATED AT

1525-1535 RIO VISTA AVENUE, LOS ANGELES, CALIFORNIA 90023

DATED MAY 28, 2004





	 	 	therein,
Lessee shall give Lessor written notice of such intent (herein referred to as “Lessee’s
Notice of Intent”), in strict accordance with the procedures hereinafter set forth.
Lessee’s Notice of Intent shall set forth a date, herein referred to as the “Termination
Date”, upon which it is intended that a proposed sublease, transfer, license of assignment
would become effective and shall be accompanied by an executed copy of the assignment,
license, sublease or other document, a copy of the proposed assignee, transferee, licensee
or sublessee’s balance sheet and profit and loss statement for the last three (3) years, a
written business history of the proposed assignee, transferee, licensee or sublessee a
statement of the uses to which the proposed assignee, transferee, licensee or sublessee
shall use the Premises, and any other information reasonably requested by the Lessor.
	 
	 	 	The Termination Date shall not be less than ninety (90) days or more than one hundred twenty
(120) days from the date that Lessor receives Lessee’s Notice of Intent. Within twenty (20)
days after Lessor’s receipt of Lessee’s Notice of Intent, Lessor may give written notice to
Lessee that Lessor elects to terminate this lease effective as of the Termination Date. If
Lessor shall so elect to terminate this Lease, then neither Lessor nor Lessee shall be
liable to the other for any reason having to do with this Lease from and after the
Termination Date, except for matters which shall have risen prior to termination and except
for obligations of Lessee that exist upon termination. If Lessor shall elect to terminate
this Lease, Lessor may lease the Premises directly to the proposed transferee, it being
expressly understood and agreed to by Lessee that Lessor shall have the right to enter into
negotiations with the proposed transferee for the lease of the Premises or other space in
the Industrial Center and that such negotiations and lease shall not be deemed to be an
interference with or of Lessee’s business or rights. In the event that Lessor does not
exercise Lessor’s right to terminate this Lease and in the event that Lessee does not in
fact execute a final and binding sublease or assignment within one hundred twenty (120) days
after said Termination Date, then Lessee shall be obligated to give another Lessee’s Notice
of Intent to Lessor before Lessee may assign or sublease, and the terms of this Paragraph 53
shall reapply. Failure of Lessor to exercise its right to terminate this Lease under this
Paragraph 53 shall not be deemed a waiver of the right to subsequently terminate this Lease
in accordance with the terms hereof, as it is intended that this option to cancel shall
continue to exist during the entire term of this Lease and any extension thereof.
	 
	 	 	In the event that Lessor, from time to time, declines to exercise its option to cancel this
Lease, that decision shall not be deemed a waiver by Lessor or Lessor’s right to approve or
disapprove of the assignment or subletting by Lessee as the same is otherwise provided for
in Paragraph 12 and 53 of this Lease.
	 
	 	 	If Lessor consents to any assignment, transfer, conveyance, or licensing for this Lease or
to the subletting of all or any portion of the Premises, then the rent then in effect shall
be increased as of the date of such assignment, transfer, conveyance, licensing of
subletting to the amount by which any and all consideration of every kind whatsoever payable
from time to time to Lessee or its designee by such permitted assignee, transferee, licensee
or sublessee for or on account of such assignment, transfer, conveyance, license or
sublease, exceeds any and all sums periodically due by Lessee to Lessor for rent or charge
under this Lease for the space subject to such assignment, transfer, conveyance, license or
sublease.
	 
	 	 	If the rent is increased pursuant to this Paragraph, then the security deposit referred to
in Paragraph 5 hereof shall be increased concurrently therewith as provided therein. Said
increase in rent shall be due and payable to Lessor when and as said amounts become due and payable to Lessee or its designee under the terms of the permitted assignment, transfer,
conveyance, license or sublease, whether or not Lessee collects the same from its permitted
assignee, transferee, licensee or sublessee, and Lessee’s failure to pay said amounts when
due to Lessor shall be deemed a failure to pay rent hereunder and shall constitute a breach
of this Lease. Lessor may require, as a condition precedent to giving its consent to an
assignment, transfer, conveyance, license of sublease, that Lessee acknowledge in writing a
schedule be due and payable to






	 	 	 	 	 
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ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL

MULTI-TENANT LEASE-GROSS

BY AND BETWEEN

RIO VISTA INDUSTRIAL INVESTMENTS, LLC (“LESSOR”)

AND

TRUE RELIGION APPAREL INC., A NEVADA CORPORATION, AND GURU DENIM INC.,

A CALIFORNIA CORPORATION, JOINTLY & SEVERALLY (“LESSEE”)

FOR THE PROPERTY LOCATED AT

1525-1535 RIO VISTA AVENUE, LOS ANGELES, CALIFORNIA 90023

DATED MAY 28, 2004





	 	 	Lessor hereunder.
	 
	 	 	(c) No Release of Liability. Regardless of Lessor’s consent to any assignment,
transfer, mortgage, hypothecation, conveyance, licensing or subletting, no assignment,
transfer, mortgage, hypothecation, conveyance, licensing or subletting shall release Lessee
of Lessee’s obligations or alter liability of Lessee to pay the rent and to perform all
other obligations to be performed by Lessee hereunder.
	 
	54.	 	LENDERS REQUIREMENTS:
	 
	 	 	Lessee hereby agrees to make any reasonable revisions to this Lease which may be required in
good faith by a bona fide construction, interim or permanent lender in connection with the
financing of the Premises, but in no event shall such changes materially interfere with
Lessee’s use of the Premises or increase the rent or other costs of Lessee’s occupancy of
the Premises.
	 
	55.	 	SUBORDINATION:
	 
	 	 	A new sub-paragraph is hereby added to the end of Paragraph 30.1
	 
	 	 	“Lessee shall, in the event any proceedings are brought for the foreclosure of, or in the
event of exercise of the power of sale under any mortgage made by the Lessor covering its
interest in the Premises, if so requested, attorn to the purchaser upon such foreclosure or
sale, or its successors or assigns, and recognize such purchaser or its successors or
assigns, as the Lessor under this Lease provided successor assumes Lessor’s obligations,
including obligations regarding the Security Deposit.”
	 
	56.	 	WAIVERS:
	 
	 	 	The following language is hereby added to the end of Paragraph 24:
	 
	 	 	“No payment by Lessee or receipt by Lessor of a lesser amount than the fixed rent payment
herein stipulated shall be deemed to be other than on account of the earliest stipulated
rent, nor shall any endorsement or statement on any check or any letter accompanying any
check or payment as rent be
deemed an accord and satisfaction, and Lessor may accept such check or payment without
prejudice to Lessor’s right to recover the balance of such rent or pursue any other remedy
in this Lease provided.”
	 
	57.	 	PROPOSITION 65 COMPLIANCE:
	 
	 	 	Lessee shall do everything necessary and proper in order to comply with California
Proposition 65 as it relates to its operation in and its occupancy of the Premises. Lessee
shall defend, indemnify and hold harmless the Lessor, its real estate manager and agents, in
the event that either or both are found liable under Proposition 65 with respect to any act
or omission by Lessee, its agents, employees or subcontractors.
	 
	 	 	Lessor represents that to the best of its knowledge, neither the premises nor the center of
which the premises are a part contains toxic substances.
	 
	58.	 	HAZARDOUS MATERIALS PROHIBITED:
	 
	 	 	(a) Definitions. As used herein, the term “Hazardous Material” means any hazardous
or toxic substance, material or waste which has been, is now or hereafter becomes regulated
by any local governmental authority, the State of California or the United States
Government.
	 
	 	 	(b) Lessee shall not cause, permit, suffer or allow any Hazardous Material to be brought
upon, kept or used in or about the Premises by Lessee, its agents, employees, contractors or
invitees or any one else. If Lessee breaches the obligations stated in this Paragraph 58,
or if the presence of Hazardous Material on the Premises caused or permitted by Lessee
results or is likely to result in contamination of the Premises or any adjacent property or
if contamination of the Premises or any adjacent property by Hazardous Material otherwise
occurs then Lessee is legally liable to Lessor for damages resulting therefrom and Lessee
hereby






	 	 	 	 	 
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ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL

MULTI-TENANT LEASE-GROSS

BY AND BETWEEN

RIO VISTA INDUSTRIAL INVESTMENTS, LLC (“LESSOR”)

AND

TRUE RELIGION APPAREL INC., A NEVADA CORPORATION, AND GURU DENIM INC.,

A CALIFORNIA CORPORATION, JOINTLY & SEVERALLY (“LESSEE”)

FOR THE PROPERTY LOCATED AT

1525-1535 RIO VISTA AVENUE, LOS ANGELES, CALIFORNIA 90023

DATED MAY 28, 2004





	 	 	indemnifies, saves, defends and holds Lessor harmless from any and all claims,
judgments, damages, injury, penalties, fines, costs, liabilities or losses (including,
without limitation, loss or rents, diminution in value of the Premises or any adjacent
property, damages for the loss or restriction on use of rentable or usable space or of any
amenity of the Premises, damages arising from any adverse impact on marketing of space in
the Premises, and sums paid in settlement of claims, attorneys’ fees and costs, consultant
fees and costs and expert fees and costs) (“Claims” collectively herein) which arise during
or after the Lease term as a result of such contamination.
	 
	 	 	Without limiting the foregoing, if such presence of any Hazardous Material on the Premises
or any adjacent property (unless caused before the date term of this Lease commenced or by a
source outside the Premises not caused by Lessee) results in any contamination of the
Premises or any adjacent property, Lessee shall promptly take all actions at its sole
expense as are necessary to return the Premises or any adjacent property to the condition
existing prior to the introduction of any such Hazardous Material to the Premises or any
adjacent property; provided that Lessor’s approval of such actions shall first be obtained,
which approval shall not be unreasonably withheld so long as such actions would not
potentially have any material adverse long-term or short-term effect on the Premises or any
adjacent property. Lessee’s obligations shall include, but not be limited to, the effects
of any contamination or injury to person, property or the environment created or suffered by
Lessee, and the cost of investigation, removal, remediation, restoration and/or abatement,
and shall survive the expiration or termination of this Lease. No termination, cancellation
or release agreement entered into by Lessor and Lessee shall release Lessee from its
obligations under this Lease with respect to Hazardous Materials, unless specifically so
agreed by Lessor in writing at the time of such agreement.
	 
	 	 	(c) Lessee shall not cause or permit any Hazardous Materials to be spilled or released in,
on, under, or about the Premises (including through the plumbing or sanitary sewer system)
and shall promptly, at Lessee’s expense, take all investigative and/or remedial action
reasonably recommended, whether or not formally ordered or required, for the cleanup of any
contamination of, and for the maintenance, security and/or monitoring of the Premises or
neighboring properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Materials brought onto the Premises during the term
of this Lease, by or for Lessee, or any third party.
	 
	 	 	(d) It shall not be unreasonable for Lessor to withhold its consent to any proposed
assignment of the Lease or subletting of all or any portion of the Premises if (i) the
proposed assignee’s or sublessee’s anticipated use of the Premises involved the generation,
storage, use, treatment or disposal or Hazardous Material; (ii) the proposed assignee or
sublessee has been required by any prior landlord, lender or governmental authority to take
remedial action in connection with Hazardous Material contaminating a property if the
contamination resulted from such assignee’s or sublessee’s actions or use of the property in
question; or (iii) the proposed assignee or sublessee is subject to an enforcement order
issued by any governmental authority in connection with the use, disposal or storage of a
Hazardous Material.
	 
	 	 	(e) Neither Lessor nor its employees, contractors or invitees shall cause, permit, suffer or
allow any Hazardous Material to be brought upon, kept, used in or about the building of
which the Premises are a part. Lessor shall hold Lessee harmless and shall indemnify Lessee
from any and all claims, judgments, damages, injuries, penalties, fines, costs, liabilities
of losses which arise out of the use or storage of Lessor’s failure to perform in accordance
with the provisions of this Paragraph.
	 
	59.	 	RENT:
	 
	 	 	Rent shall be payable in accordance with the following schedule:






* July 1, 2004 through June 30, 2005:                $15,500.00 per month + BOE




	 	 	 	 	 
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32









 






ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL

MULTI-TENANT LEASE-GROSS

BY AND BETWEEN

RIO VISTA INDUSTRIAL INVESTMENTS, LLC (“LESSOR”)

AND

TRUE RELIGION APPAREL INC., A NEVADA CORPORATION, AND GURU DENIM INC.,

A CALIFORNIA CORPORATION, JOINTLY & SEVERALLY (“LESSEE”)

FOR THE PROPERTY LOCATED AT

1525-1535 RIO VISTA AVENUE, LOS ANGELES, CALIFORNIA 90023

DATED MAY 28, 2004





July 1, 2005 through June 30, 2006:                 $15,965.00 per month + BOE




July 1, 2006 through June 30, 2007:                 $16,445.00 per month + BOE




* For Rental Abatement periods, please see paragraph #74.




	60.	 	BUILDING OPERATING EXPENSES:
	 
	 	 	Building Operating Expenses (BOE) cover prorated costs for the water utility to the project
and for landscaping maintenance. Lessee shall contract with a disposal company for pickup
of refuse and pay all utilities except water, which is metered for multiple buildings.
	 
	61.	 	AMOUNT OF RENT PAYABLE & DOCUMENTS TO BE DELIVERED UPON EXECUTION:
	 
	 	 	Concurrent with the execution and delivery of this Lease, Lessee shall pay Lessor a total
amount of $62,000.00 and deliver documentation as follows:






	 	(a)	 	the sum of $15,500.00, which is to be applied against the rent payable
hereunder for the first month of the lease term — July 1, 2004 — July 31, 2004;
	 
	 	(b)	 	security deposit in the amount of $46,500.00;
	 
	 	(c)	 	provide Lessor with evidence that Lessee has secured liability insurance as
called for in Paragraph 8.1 of this Lease Agreement with Lessor named as additional
insured.






	62.	 	EARLY POSSESSION:
	 
	 	 	Lessor shall grant Lessee early possession of the subject premises upon full execution of
the Lease and receipt of all monies, Certificate of Insurance as provided for in Paragraph
61. However, Lessee shall not interfere with Lessor’s contractors who will be improving the
Premises (per paragraph #68).
	 
	63.	 	ROOF PENETRATIONS:
	 
	 	 	If Lessee‘s Work, Lessee Owned Alternations and/or Utility Installations require
any penetration of the roof structure, roof membrane, or roof cover of the Premises, Lessee
shall at its sole cost and expense (a) make any necessary repairs caused as a result of said
work utilizing a roofing contractor which contractor is satisfactory to Lessor and Lessee;
and (b) provide Lessor with a new roof warranty from a contractor satisfactory to Lessor if
such work voids any existing warranty on the roof. Upon the expiration or sooner
termination of this Lease, Lessor shall have the right to require Lessee at Lessee’s sole
cost and expense to remove such roof penetrations and restore the roof to the condition
prior to the existence of such roof penetrations. Lessee must obtain approval form Lessor
prior to making any roof penetrations and Lessor reserves the right to use the roofer of
record to seal penetrations, at Lessee’s sole cost, so as to preserve the existing warranty.
	 
	64.	 	LIMITATION ON LESSOR’S LIABILITY:
	 
	 	 	The parties, for themselves and all of their respective heirs, executors, administrators,
successors and assigns, covenant and agree that, in the event that Lessor herein is or
becomes a partnership and in the event of any actual or alleged failure, breach or default
hereunder by such Lessor, the sole and exclusive remedy shall be against the assets of
Lessor and not against any partner of Lessor.
	 
	65.	 	SUBMISSION OF LEASE:
	 
	 	 	The submission of this Lease by Lessor to Lessee shall not constitute an offer to lease the
Premises to Lessee. This Lease shall not be binding between Lessor and Lessee until it is
fully executed and delivered and shall not be construed in favor of or against the party who
drafted it.
	 
	66.	 	REAL ESTATE LICENSE DISCLOSURE:
	 
	 	 	Lessee acknowledges that Lessee has been advised that Jerrold S. Felsenthal is a real
estate licensee.






	 	 	 	 	 
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ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL

MULTI-TENANT LEASE-GROSS

BY AND BETWEEN

RIO VISTA INDUSTRIAL INVESTMENTS, LLC (“LESSOR”)

AND

TRUE RELIGION APPAREL INC., A NEVADA CORPORATION, AND GURU DENIM INC.,

A CALIFORNIA CORPORATION, JOINTLY & SEVERALLY (“LESSEE”)

FOR THE PROPERTY LOCATED AT

1525-1535 RIO VISTA AVENUE, LOS ANGELES, CALIFORNIA 90023

DATED MAY 28, 2004





	67.	 	“AS IS” CONDITION:
	 
	 	 	Lessee hereby acknowledges that Lessee accept as noted in Paragraph 68 is leasing the
Premises in their existing “AS IS/WHERE IS” condition; that Lessee has made a full
inspection and investigation of the physical condition of the Premises, all easements,
rights, rights of way, reservations, covenants, conditions and restrictions with respect to
the Premises and all other matters of record and all laws applicable to the Premises and to
Lessee’s business; the Lessee is relying entirely upon said inspections and investigations
made by Lessee; that Lessee is not relying upon any representations or warranties made by
Lessor or Lessor’s agents, except as specifically set forth in this Lease; that Lessee is
satisfied that the Premises are suitable for Lessee’s intended use; that no representation
or warranty is made regarding the square footage of the Premises nor any other physical
attributes of the Premises; that Lessee has determined that the building’s fire and life
safety system, if any, is satisfactory for Lessee’s intended use and any requirements of the
appropriate fire department and Lessee’s insurance underwriter.
	 
	68.	 	LESSOR IMPROVEMENTS:
	 
	 	 	Lessor at Lessor’s sole cost and discretion shall do the following:
	 
	 	 	Build an approximate 400 square foot conference room in 1525 Rio Vista. Location shall be
downstairs just west of the existing offices. Said conference room shall have a dropped
ceiling, HVAC, electrical and phone outlets per City of Los Angeles code, a double man door
and lighting.
	 
	 	 	Build an eight foot (8’) high partition enclosure which will run off the rear warehouse wall
of 1535 Rio Vista. Said area will be approximately 37’ x 23’ and will not include a dropped
ceiling HVAC or lighting but the Lessor will bring power to the location and Lessee will
distribute as needed.
	 
	69.	 	SECURITY; LESSOR NON-RESPONSIBILITY; INDEMNIFY:
	 
	 	 	Lessor and Lessee expressly agree that Lessee shall have the sole responsibility of
providing security for the Premises and the persons therein, and Lessor shall have no
responsibility with respect thereto. Under no circumstances, and in no event, shall Lessor
be liable to Lessee or to any other person by reason of any theft, burglary, robbery,
assault, trespass, unauthorized entry, vandalism, or any other act of any third person
occurring in or about the Premises, and Lessee shall indemnify Lessor and hold it harmless
from and against any and all losses, liabilities, judgments, cost, or expenses (including
reasonable attorneys’ fees and other costs of investigation or defense) which Lessor may
suffer by reason of any claim asserted by any person arising out of, or related to, any of
the foregoing, except if caused by Lessor’s willful misconduct or gross negligence.
	 
	70.	 	REPAIRS:
	 
	 	 	Notwithstanding anything to the contrary contained in this Lease, Lessor shall not be
required to repair any damage or replace any portion of the Premises or the Building which
was caused by or due to the intentional or negligent acts or omissions of Lessee, its
employees, agents or invitees; and, at its sole cost and expense Lessee shall repair or
replace any such matters.
	 
	71.	 	CONDITION AND AVAILABILITY OF ELECTRICAL SERVICES:
	 
	 	 	Lessee is executing this Lease with the understanding that existing electrical services may
contain amperage and power ratings that are actually different than what is shown on the
power panel itself and/or on the marketing brochures. Lessor cannot confirm, guarantee or
substantiate that such amperage or power ratings are correct. Lessee agrees to confirm the
presence and/or availability of such electrical services with Lessee’s electrical contractor
and/or with the City of Los Angeles or the Southern California Edison Company (or applicable
utilities service company) and hereby releases. Lessor from any such electrical service
insufficiencies that may exist.
	 
	72.	 	RENT PAYMENTS/LATE CHARGES:






	 	 	 	 	 
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ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL

MULTI-TENANT LEASE-GROSS

BY AND BETWEEN

RIO VISTA INDUSTRIAL INVESTMENTS, LLC (“LESSOR”)

AND

TRUE RELIGION APPAREL INC., A NEVADA CORPORATION, AND GURU DENIM INC.,

A CALIFORNIA CORPORATION, JOINTLY & SEVERALLY (“LESSEE”)

FOR THE PROPERTY LOCATED AT

1525-1535 RIO VISTA AVENUE, LOS ANGELES, CALIFORNIA 90023

DATED MAY 28, 2004





	 	 	Lessee hereby acknowledges that (i) Base Rent is due and payable on the first
(1st) day of each month regardless of the fact that Lessor may not bill Lessee
for such payment; and (ii) late charges and interest charges for failure to timely pay rent
and other sums due under this Lease shall be strictly enforced by Lessor.
	 
	73.	 	CONFIDENTIALITY:
	 
	 	 	It is expressly understood and agreed that Lessee shall hold the terms and conditions of
this Lease in strictest of confidence. Lessee shall not disclose the terms of this Lease to
any other existing or prospective tenants in the Buildings.
	 
	74.	 	RENTAL ABATEMENT:
	 
	 	 	The parties acknowledge that Lessee is not paying the Base Rent, and all other additional
Rent during the second (2nd) month of the Lease, August 1, 2004 through August
31, 2004 (“Rental Abatement Period”) herein. However, the Lessee is required to pay during
the Rental Abatement Period all utilities. The parties acknowledge that the foregoing
Rental abatement Period has been granted to Lessee as additional consideration for entering
into this Lease, and for agreeing to pay the rent and performing the terms and conditions
otherwise required under the Lease. Accordingly, in the event of a Breach by Lessee which
Lessee fails to cure within the times permitted for curing hereunder, Lessee shall be
obligated to pay all Base Rent otherwise abated hereunder during the Rental Abatement
Period, with interest as provided in the Lease from the date such Base Rent would otherwise
have been due but for the abatement provided for herein, immediately upon written demand by
Lessor. The Parties hereby agree that Lessee’s obligation to repay any abated Base Rent and
interest thereon is of the essence of this Lease and Lessee‘s covenant was a
material inducement to Lessor entering into this Lease.
	 
	75.	 	PARKING:
	 
	 	 	The premises includes a total of twenty (20) parking spaces in the subject industrial
complex (Please see Exhibit (“C”).
	 
	76.	 	OPTION(S) TO EXTEND:
	 
	 	 	Attached hereto and made a part hereof.
	 
	77.	 	HAZARDOUS MATERIALS & ADA NOTICE:
	 
	 	 	Attached hereto and made a part hereof.
	 
	78.	 	DISCLAIMER AND INDEMNIFICATION:
	 
	 	 	This document has been prepared by GVA DAUM, Inc. (“Broker”) at the request of all parties
which agree to indemnify and hold its principals, shareholders, officers, agents and
employees harmless from any liability which may arise from the preparation of this or any
subsequent document relating to the proposed or succeeding transaction.
	 
	 	 	All parties acknowledge having been advised to have this and all transaction documents
approved by legal counsel and financial counsel prior to execution and delivery.
	 
	 	 	This Lease is entered into with the understanding that Lessee has independently verified to
its satisfaction the following items: All measurements, utilities (including power,
plumbing, heating and air-conditioning systems), minimum clearance, loading door(s)
dimensions, truck access, fire sprinkler system capacity (if any), restrooms, City codes
including zoning, setbacks, occupancy permits, hazardous material and waste inspection, and
ability to conduct its intended use on the premises.
	 
	 	 	Any information provided by Broker has been obtained from sources deemed reliable. While
Broker does not doubt its accuracy, Broker has not verified it, assumes no responsibility
and makes no guarantee, warranty or representation regarding it. It is Lessee’s
responsibility to independently confirm its accuracy







	 	 	 	 	 
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ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL

MULTI-TENANT LEASE-GROSS

BY AND BETWEEN

RIO VISTA INDUSTRIAL INVESTMENTS, LLC (“LESSOR”)

AND

TRUE RELIGION APPAREL INC., A NEVADA CORPORATION, AND GURU DENIM INC.,

A CALIFORNIA CORPORATION, JOINTLY & SEVERALLY (“LESSEE”)

FOR THE PROPERTY LOCATED AT

1525-1535 RIO VISTA AVENUE, LOS ANGELES, CALIFORNIA 90023

DATED MAY 28, 2004





	 	 	and completeness. Lessee hereby
indemnifies and holds harmless Broker named in this transaction, its principals,
shareholders, officers, agents and employees from the following: Any claim for personal
injury, merchandise or property damage or loss of value arising from or related to physical
condition of the property, including, without limitation, soil, roof or structural
condition, any claim, dispute or action in connection with completion of work or repairs to
the premises, any expense including reasonable attorney fees and costs suffered in
connection with any of the above matters.
	 
	 	 	Broker has provided Lessor with credit information obtained from Lessee, which Broker has
not verified and does not guarantee. Lessor acknowledges that Broker does not guarantee
either rent payment or Lessee’s performance of the terms of the lease agreement. Lessor’s
execution of this lease is based strictly on Lessor’s independent verification of Lessee’s
credit-worthiness and Lessor holds Broker harmless in the event of Lessee’s default.





	 	 	 	 	 	 	 	 	 	 	 
	AGREED AND ACCEPTED:	 	 	 	AGREED AND ACCEPTED:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	LESSOR:	 	 	 	LESSOR:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	RIO VISTA INDUSTRIAL INVESTMENTS, LLC	 	 	 	TRUE RELIGION APPAREL INC.,	 	 
	 	 	 	 	 	 	A NEVADA CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	
	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Jerrold S. Felsenthal, Manager
	 	 	 	 	 	Jeffrey Lubell, President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Kymberly Lubell, Secretary	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	GURU DENIM INC.,	 	 
	 	 	 	 	 	 	A CALIFORNIA CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Jeffrey Lubell, President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Kymberly Lubell, Secretary	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 






	 	 	 	 	 
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Hazardous Substances

And Americans with Disabilities Act




77.




Re:
1525-1535 South Rio Vista Avenue, Los Angeles, CA 90023

       Property Address




Notice to Owners, Buyers and Tenants Regarding Hazardous Substances and Underground Storage Tanks



Comprehensive Federal, state and local regulations have recently been enacted to control the use,
storage, handling, clean up, removal and disposal of hazardous and toxic wastes and substances.
Extensive legislation has also been adopted with regard to underground storage tanks. As real
estate licensees, we are not experts in the area of hazardous substances and we encourage you to
consult with your legal counsel with respect to your rights and liabilities with regard to
hazardous substances laws and regulations and to obtain technical advice with regard to the use,
storage, handling, clean-up, removal or disposal of hazardous substances from professionals, such
as a civil engineer, geologist or other persons with experience in these matters to advise you
concerning the property. We also encourage you to review the past uses of the property, which may
provide information as to the likelihood of the existence of hazardous substances or storage tanks
on the property.



DAUM Commercial Real Estate Services will disclose any knowledge it actually possesses with respect
to the existence of hazardous substances or underground storage tanks on the property. DAUM
Commercial Real Estate Services has not made any investigations or obtained reports regarding the
property, unless so indicated in a separate document signed by DAUM Commercial Real Estate
Services. DAUM Commercial Real Estate Services makes no representation or warranty regarding the
existence or non-existence of hazardous substances or underground storage tanks on the property.



With regard to the sale of real property, recently enacted California Health and Safety Code
Section 25359.7 provides that any owner of non-residential real property who knows, or has
reasonable cause to believe, that any release of hazardous substances has come to be located on or
beneath real property, shall, prior to the sale of real property, give written notice of that
condition to the buyer of the real property. Failure of the owner to provide written notice when
required shall subject the owner to actual damages and other remedies provided by the law. In
addition, where the owner has actual knowledge of the presence of any hazardous substance and
knowingly and willfully fails to provide written notice to the buyer, the owner is liable for a
civil penalty not to exceed $5,000 for each separate violation.



With regard to leases of real property, Section 25359.7 of the California Health and Safety Code
provides that any lessee of real property who knows, or has reasonable cause to believe, that any
release of hazardous substances has come to be located on or beneath the real property shall, upon
discovery by the lessee of the presence or suspected presence of a hazardous substance release,
give notice of that condition to the owner of the real property. Failure of the lessee to provide
written notice as required to the owner shall make the lease voidable at the discretion of the
owner. The Health and Safety Code provides that if the lessee has actual knowledge of the presence
of any hazardous substance release and knowingly or willfully fails to provide written notice as
required to the owner, the lessee is liable for a civil penalty not to exceed $5,000 for each
violation.



As used in this notice, the term “hazardous substances” is used in the broadest sense and includes
all hazardous and toxic materials, substances, or waste as defined by applicable Federal, state and
local laws and regulations and includes, but is not limited to petroleum products, paints and
solvents, PCBs, asbestos, pesticides and other substances. Hazardous substances may be found on
any type of real property, improved or unimproved, occupied or vacant.




Notice to Owners, Buyers and Tenants Regarding the “Americans with Disabilities Act”



Legislation known as the “Americans with Disabilities Act” (“ADA”) was recently adopted and may
affect The Property and/or its intended use. As real estate licensees, we are not experts in the
legal or technical aspects of ADA




37









 







as it may pertain to you. We encourage you to consult your legal
counsel, architect and/or other professionals with appropriate experience with regard to your
rights or obligations for compliance with ADA.



DAUM Commercial Real Estate Services makes no representation or warranty regarding the status of
The Property with regard to Hazardous Substances or the ADA.




	 	 	 	 	 	 	 	 	 	 	 
	By

	 	 	 	 	 	Dated
	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	True Religion, Apparel Inc.

a Nevada Corporation	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By

	 	 	 	 	 	Dated	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Guru Denim Inc., a California
Corporation	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By

	 	 	 	 	 	Dated	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	

	 	Rio Vista Industrial, Associates, LLC	 	 	 	 	 	 	 	 






38









 










	Exhibit A




	1525-1535 SOUTH RIO VISTA AVENUE, LOS ANGELES, CALIFORNIA






39









 












	EXHIBIT B
1525-1535 SOUTH RIO VISTA AVENUE
SIGN EXHIBIT






40









 












	EXHIBIT C




	1525-1535 SOUTH RIO VISTA VENUE
PARKING EXHIBIT







41









 








OPTION(S) TO EXTEND

STANDARD LEASE ADDENDUM




Dated May 28, 2004




By and Between (Lessor) Rio Vista Industrial Investments, LLC





			
	               (Lessee)	 	True Religion Apparel, Inc.,

a Nevada Corporation, and Guru Denim Inc.,

a California Corporation, Jointly & Severally





Address of Premises: 1525-1535 South Rio Vista Avenue, Los Angeles, CA 90023




Paragraph  76




A. OPTION(S) TO EXTEND:



Lessor hereby grants to Lessee the option to extend the term of this Lease for  3 
additional 12 month period(s) commencing when the prior term expires upon each and all
of the following terms and conditions:




     (i) In order to exercise an option to extend, Lessee must give written notice of such election
to Lessor and Lessor must receive the same at least 4 but not more than 7 months
prior to the date that the option period would commence, time being of the essence. If proper
notification of the exercise of an option is not given and/or received, such option shall
automatically expire. Options (if there are more than one) may only be exercised consecutively.



     (ii) The provisions of paragraph 39, including those relating to Lessee’s Default set forth in
paragraph 39.4 of this Lease, are conditions of this Option.



     (iii) Except for the provisions of this Lease granting an option or options to extend the
term, all of the terms and conditions of this Lease except where specifically modified by this
option shall apply.



     (iv) This Option is personal to the original Lessee, and cannot be assigned or exercised by
anyone other than said original Lessee and only while the original Lessee is in full possession of
the Premises and without the intention of thereafter assigning or subletting.



     (v) The monthly rent for each month of the option period shall be calculated as follows, using
the method(s) indicated below: (Check Method(s) to be Used and Fill in Appropriately)



     (vi) Lessee must have met all conditions of the lease and not have been in default of any
lease obligations.



	 	 	 	 	 
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	 	REVISED	 	FORM OE-3-8/00E






42









 






þ III. Fixed Rental Adjustment(s) (FRA)




     The Base Rent shall be increased to the following amounts on the dates set forth below:



	 	 	 	 	 
	On (Fill in FRA Adjustment Date(s)):	 	The New Base Rent shall be:	 
	August 1, 2007
	 	$	16,940.00	 
	August 1, 2007
	 	$	17,450.00	 
	August 1, 2007
	 	$	17,975.00	 
	 
	 	 	 
	 
	 	$	 	 
	 
	 	 	 





B. NOTICE:




     Unless specified otherwise herein, notice of any rental adjustments, other than Fixed Rental
Adjustments, shall be made as specified in paragraph 23 of the Lease.




	 	 	 	 	 
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	 	REVISED	 	FORM OE-3-8/00E






43









 






C. BROKER’S FEE:




     The Brokers shall be paid a Brokerage Fee for each adjustment specified above in accordance
with paragraph 15 of the Lease.


NOTE: These forms are often modified to meet changing requirements of law and needs of the
industry. Always write or call to make sure you are utilizing the most current form: AIR
COMMERCIAL REAL
ESTATE ASSOCIATION, 700 S. Flower Street, Suite 600, Los Angeles, Calif. 90017





	 	 	 	 	 
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	 	REVISED	 	FORM OE-3-8/00E








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